Cargo helps bring Korean Air into the black
Despite continuing travel restrictions, Korean Air Lines managed to turn a profit in the second quarter thanks to cargo revenues, which skyrocketed more than 90 percent on year.
The airline announced in a preliminary report Thursday a net profit of 162.4 billion won ($137.05 million) in the April-June period from a 380.8 billion won net loss during the same quarter last year.
The carrier reported a 148.5-billion-won operating profit in the second quarter, compared to a 101.5-billion-won operating loss in the same quarter last year.
Sales, however, were down 44 percent on year to 1.69 trillion won from 3.2 trillion won.
The profit was largely generated from cargo on both dedicated planes and passenger planes.
Although many passenger flights were grounded, the airline said it raised the operation rate of its cargo carriers by 22 percent on year.
Sales from cargo jumped 94.6 percent on year to reach 1.23 trillion won.
The airline's freight ton-kilometers, a metric ton of revenue load carried one kilometer, rose 17.3 percent on year.
Around the world, a decrease in supply of cargo transportation raised prices, improving profits, according to Korean Air Lines.
Revenue passenger kilometers, which measure the volume of passengers carried by an airline, nosedived 92.2 percent on year due to travel restrictions caused by the coronavirus crisis.
“After April, demand for domestic routes centering on Jeju Island has recovered, and demand for international routes has slightly improved after June,” said Korean Air Lines in a statement.
The airline predicted the difficulties to continue through the second half of the year.
The airline plans to make use of its large cargo fleet to transport electronics goods, semiconductor equipment and automobile components. It also plans to transport more cargo by removing seats from passenger planes starting in September. The airline is waiting for approval to remove the seats from Boeing and the Ministry of Land, Infrastructure and Transport.
“The second quarter profit is the result of Korean Air Lines’ stringent efforts to cut fixed costs, including labor costs through unpaid vacations,” said Choi Jeong-chul, an aerospace engineering professor at the Graduate School of Manufacturing Innovation at Inha University. “Such efforts will need to continue for more than a year for the airline to sustain the business.”
To cut costs and promote "contactless culture" to keep passengers and staff safe, the airline plans restructure its mobile app and online webpage.
The airline is charging a 30,000-won service fee if passengers purchase or reschedule international flight bookings at brick-and-mortar service centers starting in November.
BY JIN MIN-JI [email@example.com]