Korean air announces Q4 and full-year performance results for 2012

Korean Air, South Korea’s flagship airline, has today announced its financial results for the fourth quarter and full year ending December 31, 2012.

Due to weak economic recovery and high fuel prices, Korean Air posted an operating income of 3,083.5 billion KRW for the fourth quarter of 2012, and an operating loss of 17.6 billion KRW. International passenger and cargo business remained the major revenue contributors for the airline in Q4, accounting for 56.4% and 26.5% of the operating revenue respectively. Compared to the same period last year net income for Q4 increased by 215.1% to 140.3 billion KRW.

For the full year of 2012, the airline recorded an operating income of 12,728 billion KRW, up 3.7% year-on-year, and an operating profit of 322.4 billion KRW. The net income for 2012 returned to the black and reached 256.4 billion KRW.

International Passenger Business
During the last quarter, Korean Air saw increased traffic in Southeast Asian countries (up 12%), Europe (up 8%) and China (up 6%). Based on the 4th quarter performance, its international passenger segment recorded a historically high traffic of 16,167 million RPK, a Y-o-Y growth of 2.4%. Passenger carrying capacity increased 0.2% to 21,117 million ASK. Korean outbound traffic also lifted 9% compared to the same period last year.

According to IATA international air traffic is expected to grow by 5.1% in 2013 and the Asian region growth rate is projected to exceed 8%, hence passenger traffic is expected to continue on a steadily upward trend. In addition, with the introduction of new routes (such as Incheon – Colombo and Incheon – Male) and the stepping up of flight frequency on selected routes, such as Busan – Narita, Incheon – Narita, Incheon – Xiamen, Incheon – Toronto and Incheon – Paris, Korean Air sees potential growth in passenger traffic.

With the addition of seven aircraft to the fleet in 2013, including Airbus A380 and Boeing B777 models, the airline expects to see an improvement in profitability.

Cargo Business
Due to capacity control to maintain load factors and a relocation of manufacturing facilities abroad, cargo traffic recorded a year-on-year fall of 7.2% to 2,122 million FTK as it saw a Y-o-Y decrease of 5% and 7% in Korean outbound shipments and transit shipments respectively. Transit shipments from Japan reported a slump while transit shipments from the Americas recorded an increase of 16%. In Q4, to ensure profitability with cost cutting measures by capacity control, Korean Air focused on sales of high margin products such as perishables and medicines.

Going into 2013, global air cargo is projected to increase by 2%, according to IATA, and the Asian region is expected to record an increase in profit margins driven by sales growth. With the reorganizing of the network and exploitation of new markets such as South America and MEA, Korean Air is optimistic about growth in the cargo segment.

Korean Air will continue to expand its business prudently while enhancing the quality of its service in 2013. With its long-standing commitment to achieving “Excellence in Flight”, Korean Air aims to provide the best quality possible to its customers while bringing the best returns to its shareholders.

* Exchange rate on December 31, 2012: 1 US Dollar = 1,071.1 KRW

Korean Air will introduce nine additional next-generation aircraft to its fleet in 2013; two A380s, one A330-200, two B777-300ERs, two B737-900ERs, one B747-8F and one B777F.

The arrival of the addition two A380s, the superjumbo nicknamed “a hotel in the sky”, in July and October 2013, will bring the number of Korean Air’s A380s to eight.

Korean Air will mostly deploy these superjumbos on long-haul flights, including New York and Los Angeles. During the month of January 2013, the A380 frequency between Incheon - New York has been doubled from seven to fourteen flights a week. The frequency of the A380 operation between Incheon - LA route is also increased from seven to twelve flights a week during the same period. Korean Air will increase A380 operational frequency on busy routes during high seasons, such as in August or December in order to meet demand.

On 1 February, Korean Air will resume the A380 service between Incheon-Frankfurt and in August, the airline will begin its A380 service between Incheon and Atlanta.

Korean Air is committed to adopting fuel efficient and eco-friendly next-generation aircraft, which maximize passenger comfort with state-of-the-art seats and upgraded inflight services.

Korean Air introduced thirty aircraft during 2011 and 2012; sixteen in 2011 and fourteen in 2012. Korean Air plans to take delivery of a total of 53 aircraft including five B747-8is, ten B787-9s referred to as the ‘Dreamliner’ and ten CS300s by 2018.

As of January 2013, Korean Air’s fleet numbered 152 aircraft. By the 50th anniversary of Korean Air in 2019, the aim is to have 200 aircraft, in keeping with the company ethos “to be a respected leader in the world airline community”.

Sourced: eTravel Blackboard