The airline posted an operating profit of 154 billion KRW for the fourth quarter, a significant increase of 580.9% compared to 22.6 billion KRW a year earlier, thanks to the surging growth of cargo business and a pick-up in the international passenger business in the reporting period. During the quarter, the airline recorded a net income of 122.3 billion KRW, compared to a loss of 644 billion KRW in the same quarter in the previous year. Operating revenue held steady at 2,578.2 billion KRW during the quarter in spite of a challenging operating environment for the aviation industry. International passenger and cargo businesses remained the major revenue contributors for the airline in Q4, accounting for 48.1% and 36.5% of the operating revenue respectively.
Lower fuel prices and a stronger Won have helped reduce the airline’s operating expense. During the reporting period, total operating expense reached 2,424.2 billion KRW, an Y-o-Y drop of 9.9%. The proportion of fuel cost lowered from 38% to 33% compared with the fourth quarter in 2008.
International Passenger Business
International passenger segment recorded a growth of 6.5% and 11.3% in passenger carrying capacity and traffic compared to a drop in the same period a year ago, reaching 18,746 million ASK and 13,444 million RPK respectively. Both figures were particularly strong in the month of December due to increasing air travel during the festive season. Moreover, an Y-o-Y growth in passenger sales from Japan and South Asia is observed, attributed to stronger Yen against the Won as well as increasing air traffic demand in the Asian region.
The cargo business has picked up since September 2009 and reached new heights in the fourth quarter of 2009. Revenue generated from the cargo segment was up 22% Y-o-Y, becoming the major growth driver in total revenue during the reporting period. Demand for world cargo rose steadily as reflected in an improvement in capacity and traffic, up 6% and 15.2% Y-o-Y to 3,179 million AFTK and 2,408 million FTK respectively. The increased cargo traffic coincided with the usual busy season for the cargo business ahead of festivities such as Thanksgiving and Christmas, while a recovery in consumer spending worldwide also fueled the growth in this segment.
The airline has made significant operational progress such as refurbishment of new generation premium seats as well as fleet expansion last year. Upholding its long-standing commitment to achieving “Excellence in Flight” as it always does, Korean Air will continue its approach in expanding and optimizing its business in a prudent manner, while aiming to provide the best quality in its service in 2010.
In terms of fleet expansion, the airline has announced orders to add Boeing 787s and Airbus 380s to its fleet mix. The airline expects to add seven more aircrafts to its fleet in 2010 and another 15 in 2011. Total investment amount in fleet purchase, upgrade and refurbishment will increase by over 50% in 2010, showing the airline’s determination in bringing the best travel experience and ultimate comfort to its passengers in the air.
Korean Air will continue its concerted efforts to maximize the profitability of the cargo business through different initiatives. With the turnaround in world cargo demand and the pick up of exports volume, the airline expects that this business segment will be the growth driver again in 2010 and revenue generated will reach another peak.
Other business initiatives such as network expansion by developing high-potential new markets and stringent cost-control will continue in 2010. Korean Air is confident that its focused growth strategies will help overcome any challenges even though the outlook of the aviation industry remains uncertain.
* Exchange rate on December 31, 2009: 1 US Dollar = [1167.6] KRW