Won's Decline Tips Transport Firms Into the Red

Transportation companies, including major airline and maritime shipping firms, are suffering from record-breaking losses caused by the current economic slowdown, including losses on foreign currency translation triggered by the won's loss of value.

Korean Air Line Co., Ltd., recorded an increase in sales during the first quarter, but suffered a net loss amounting to 333.6 billion won ($256 million), all but 100 billion of it due to losses on foreign currency translation. Asiana Airline Inc. recorded losses of 107.2 billion won.

"During the first quarter, 1.24 million people entered Korea, marking a 0.3 percent decrease compared to the same period last year," a KAL source explained. "Increases in costs including rising fuel prices worsened the losses."

Major sea transport companies also suffered from the won's decline, despite increases in sales. Hyundai Merchant Marine increased its sales by 155.7 billion won, or 17.2 percent, during the first quarter despite the losses in the Mount Kumgang tour program. But currency transactions pulled down the net to red ink.

The industry plans to revise its standard of foreign currency translation, in which foreign debts and assets are calculated by the previous year-end rate. The won has fallen about 3 percent from its year-end close of 1,259 to the dollar.

by Hong Seung-il