Korean Air recorded its highest ever operating
profit numbers for the first quarter of 2010 ended March 31, 2010.
Thanks to the surging growth in international passenger business
and Korea-outbound traffic, as well as the rising demand for
premium class services in the first quarter of 2010, the airline
posted an operating revenue of 2,599 billion KRW, a year-on-year
increase of 14.8%, while operating profit recorded a historic jump
of 33.3 times to 220.2 billion KRW.
Income before tax turned to the black from
a loss of 673.9 billion KRW in Q1 2009 to a surplus of 226.9
billion KRW during the reporting period. International passenger
and cargo businesses remained the major revenue contributors for
the airline in Q1, accounting for 55% and 33% of the operating
posted overall growth of 1.8% and 14.4% in international passenger
capacity and traffic compared to the corresponding period last
year, reaching 18,386 million ASK and 14,153 million RPK
Thanks to the rebound of the global economy in the
reporting period, the demand for premium class services rose
sharply, up 22% year- on-year, and became a significant contributor
to profit. Moreover, the airline saw a steady pickup of transit
passenger volume since 2008, which also facilitated the overall
surge in profitability.
Attributable to the faster recovery of
the economy in China and South East Asia compared to other parts
of the world, travel demand also saw a quicker rebound in these
regions. Korean Air saw 16% and 27% growth respectively on these
routes during the reporting period. A stronger Korean Won in Q1
2010 also led to an increase in Korea-outbound traffic.
Demand for world cargo rose steadily as reflected in a
significant improvement in the performance of Korean Airís cargo
business in the first quarter of 2010. Capacity and traffic
increased by 10.8% and 21.1% to 3,001 million AFTK and 2,315
million FTK respectively. Revenue generated from this segment
posted a year-on-year increase of 57%, with China and Japan routes
reaching new heights and exceeding their performance in 2008, a
year when worldwide cargo business was substantial. Moreover,
cargo revenue generated from Korea surged markedly by 134%,
attributable to the increasing exports of Korean IT companies.
2010 Operational Environment
Korean Air said it expects
2010 will be a thriving year for the aviation industry, driven by
the positive operating environment both domestically and
internationally. International air traffic demand is expected to
be boosted by the rebound of the global economy, together with
international events such as the 2010 World Expo and the 2010
World Cup. Passenger traffic from China should benefit from the
increase in US visa issuing posts in the country. Favorable
factors in Korea such as a stable dollar exchange rate, US visa
waiver program influence, and the G20 Summit to be hosted in Seoul
should also be positive for Korean Air in the year to come.
Apart from passenger traffic, world cargo business is also
expected to prosper in 2010, thanks to the healthy export of IT
products (such as LCD, semi-conductor and cell phones), high growth
of intra-Asia demand, the introduction of economic partnership and
trade agreements between Korea and India and the EU, and stability
in the US exchange rate and fuel costs.
The airline expects to see
double- digit growth in its operating revenue and cargo business in
2010. Korean Air sees the cargo business as a strong growth driver
in 2010, and will continue its concerted efforts to maximize the
profitability of this business segment through a range of
With competitive, renovated next generation
aircraft with new premium seats, Korean Air will continue its
efforts to strengthen its premium class service, and will
introduce new fleet with enhanced fuel, maintenance and
environmental efficiency. In terms of fleet size, Korean Air
targets to operate 132 aircraft in 2010 (126 as of March 2010).
The airline will also add
Boeing 787s and
Airbus 380s to its fleet mix in the coming years.
turnaround of the aviation industry, Korean Air has set high goals
for the coming ten years, with a target of reaching 140 geographical destinations, 20 million in passenger traffic and 2.5
million tons of cargo carried in 2019, the airlineís 50th
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