Korean Air Lines Co. posted a second-quarter net loss amid soaring fuel costs and a weak South Korean currency, it said Thursday.
Korean Air Lines Co. posted a second-quarter net loss amid soaring fuel costs and a weak South Korean currency, it said Thursday.
Korean Air, South Korea’s biggest airline and the world’s largest international cargo carrier, recorded a net loss of 289 billion won ($279 million) in the three months ended June 30, the company said in a statement. It lost 214.4 billion won in the same period a year ago. The most recent loss was the airline’s third straight on a quarterly basis.
ADVERTISEMENT
Sales during the quarter rose 18 percent to 2.48 trillion won ($2.4 billion), compared with 2.11 trillion won last year.
Korean Air said fuel expenses during the quarter increased 79.4 percent and were exacerbated by weakness in the South Korean won against the U.S. dollar. Fuel expenses are denominated in dollars.
The weak won also hurt Korean Air in terms of its mostly US dollar-denominated foreign currency debt. The airline booked a foreign exchange translation loss of 273.2 billion won ($263.2 million) during the quarter.
The airline, which had about $5.3 billion in foreign currency debt, books the amount in South Korean won at the end-of-quarter exchange rate. The U.S. dollar traded at 1,043.4 won on June 30, compared with 991.7 won three months earlier, it said.
The airline has struggled with soaring fuel costs amid a sharp run-up in crude oil prices that has battered the global aviation industry.
Conversely, the weak currency boosted cargo revenue by 28.4 percent as Korean exporters shipped more products overseas.
“The weakening Korean won continues to trigger additional air cargo demand from Korean exporters,” Korean Air said.
Cathay Pacific Airways Ltd. of Hong Kong last week reported its first half-year loss since 2003, while Japan’s All Nippon Airways Co. said last month its most recent quarterly profit fell by over 90 percent due to soaring fuel costs.
Japan Airlines Corp. also last week reported a loss for its most recent quarter, but managed to reduce the flow of red ink compared with the previous year.
Despite the net loss, Korean Air pointed to gains in passenger and cargo revenue as bright spots during the second quarter.
Korean Air said international passenger sales rose 16.5 percent, while revenue from first and business class, on international routes rose 17 percent.
Korean Air, which operates nearly 400 passenger flights daily to 115 cities in 38 countries, has been trying to raise its international profile with a sleek global advertising blitz stressing service and sophistication.
Korean Air said it opened new routes during the second quarter to Munich, Germany and Sao Paulo, Brazil. The airline said this week that it would begin regular passenger service to Tashkent, Uzbekistan, next month.
Shares in Korean Air fell 3.7 percent to 43,750 won ($42) in early afternoon trading.
