Korean Air Lines sees operating profit fall 36 percent

Korean Air Lines' Boeing 787-9 [KOREAN AIR LINES]

Korean Air Lines reported a 36 percent decline in operating profit to 468 billion won ($356.5 million) in the second quarter, with robust performance in the passenger segment eclipsing lower profit in the cargo business.

The operating profit fell short of market forecasts of 490.4 billion won, as compiled by the market tracker FnGuide.

Korean Air's revenue for the second quarter rose by 6 percent to 3.5 trillion won, but the growth still did not meet the market's revenue forecast of 3.7 trillion won.

The airline's net profit for the period experienced a downturn, decreasing by 18 percent to 371.5 billion won, but the performance exceeded the market forecast of 263.9 billion won.

Sales from its passenger business soared by 154 percent to 2.2 trillion won, which was attributed to an increase in passenger capacity by 20 percent from the previous quarter in response to rising travel demand as Covid-19 becomes endemic.

On the other hand, the cargo sector witnessed a 56 percent decrease in revenue to 963.8 billion won. The business has been affected by a decline in air freight demand due to increased passenger belly cargo capacity, as well as a drop in cargo rates.

Looking ahead, Korean Air expects passenger business to continue its growth trajectory in the third quarter. The cargo business is anticipated to remain weak.

"We expect stronger results from our passenger business in the third quarter fueled by robust travel demand during summer and autumn Chuseok holiday peak seasons," Korean Air said. "We plan to maximize revenue by expanding operations to popular vacation destinations and flexibly increasing capacity on routes where high demand is expected.

"The cargo business foresees intensified competition and a drop in freight rates due to weaker air cargo demand following the global economic slowdown and growing aircraft belly cargo capacity," the flag carrier continued. "We will proactively work to procure new freight demand and efficiently manage operations for increased revenue."

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]