Korean Air returns to Profitability in 1st Half 2004

Korean Air today announced a net profit of 188.9 billion Korean won (approx. US$161 million) for the six months to June of 2004, against a net loss of 284.6 billion won for the same period a year earlier.

The net profit turnaround reflected the full recovery from the effects of the SARS outbreak and the war in Iraq in 2003. Improved international passenger and cargo revenue, which grew 27.5 % and 20.5% respectively on a year-on-year basis, also contributed to the strong business results.

Operating revenue for the first half of 2004 rose from 2.8 trillion won to 3.4 trillion won, an increase of 18.9% over the same period last year. Operating expenses rose 13.6% to 3.2 trillion from 2.8 trillion, reflecting the increase in jet fuel costs as well as higher expenses due to increased business operations such as ground handling and landing fees. Operating profit climbed to 166.3 billion won from 14.1 billion, representing an increase of 1077.1% from the corresponding period of 2003. On the back of the strong Korean won, Korean Air posted a foreign exchange currency gain of 218.1 billion won, against 34.0 billion won for the same period in 2003.

Korean Air Chairman and CEO, Mr. Y. H. Cho, said: “We are very pleased and encouraged to report such strong business performance in the first half of 2004. The visible increase in international passenger and cargo revenue was the result of our ongoing commitment to ‘Service Excellence’ strategy that can meet and exceed our customers’ expectations.” 

In line with the recovery of the regional aviation industry, Korean Air recorded 1.54 trillion won in international passenger revenue, against 1.2 trillion won for the corresponding six-month period in 2003. Cargo revenue also reached 1.1 trillion won for the first six months, against 893.4 billion won a year earlier. However, there was a slight decrease in domestic passenger revenue to 328.9 billion won from 348.9 billion for the same period in the previous year after the launch of Korea Train Express in April, taking away some domestic customers from Korean Air.

During the second quarter, which is traditionally a quiet travel season, Korean Air recorded operating profit and net profit of 93.3 billion won and 15.5 billion won, against 25.7 billion loss and 103.9 billion for the second period in 2003.

Mr. Cho added: “While we are satisfied with our business operation in the first six months, we will strive for better revenue in the second half of this year. The rise in international oil prices will be a challenge for every airline, but the continuing economic recovery in the region should help alleviate the impact from higher fuel costs.”