Fuel costs, currency losses erode Korean's first-half profits

Korean Air has announced a 0.6% increase in operating revenue of USD 4.99 billion, indicating a decline in operating profit for the first half of 2019, the company said.

Available seat kilometers (ASK) increased 1.2%.

Revenue passenger-kilometres (RPK) increased 3%, which pushed the load factor up 1.5 percentage points to 81.4%. Passenger yield increased 1.1% and operating revenues grew 4.1% to W3.85 trillion.

Cargo yield strengthened 1.2%, underpinned by a 2.8% increase in freight tonne-kilometres versus a 10.7% gain in revenue tonne-kilometres. Operating revenue, however, declined 9.6%. The carrier attributes this to the US-China trade row and macroeconomic conditions.

Meanwhile, operating costs rose 4.4% over the same period, nearing operating revenue at W6.02 trillion. Over the same period, fuel oil cost remained persistently high, while consumption increased by 0.7%. Operating profit fell 82% to W47 billion, from W259 billion in the first half 2018.

Korean highlights that its debt to equity ratio increased from 707% to 835% as the result of a change in lease accounting standards plus currency effects. Compared with the first half of 2018, the won weakened against the dollar by 6.5%.

Korean Air has 146 passenger aircraft in its fleet — 105 widebodies and 41 narrowbodies — having added two Boeing 777, one 787-9 and one Airbus A220.