Korean Air Q4 Loss Wider Than Forecast
February 3, 2009
Korean Air Lines reported a worse-than-expected quarterly loss on the weak won but expected it would swing to an annual operating profit in 2009.
Korean Air, the world's largest air cargo carrier, is also set to suffer from declining exports from South Korea, Asia's fourth-largest economy.
Analysts are worried about falling cargo shipments as Korean Air is highly exposed to South Korean sales of tech products such as semiconductors, mobile phones and flat screens to developed markets.
Airlines worldwide face declining demand for passengers and cargo as the global recession deepens. Last week, Japan's All Nippon Airways said it would fall into the red in the current business year for the first time in six years.
Korean Air said it aimed to post a KRW600 billion won operating profit in 2009, compared with a KRW99.3 billion operating loss in 2008, by focusing on overseas travel demand.
Price competitiveness from the weak won and a marketing drive are helping the airline attract more transit passengers, while US visa waiver program for South Koreans is expected to support demand for outbound flights.
Korean Air posted a KRW659.5 billion (USD$474.4 million) net loss in the October-December quarter. The result compares with net losses of KRW35.3 billion a year earlier and KRW684.1 billion in the third quarter.
Heavy currency conversion losses from the won's weakness, which fell 26 percent against the dollar last year, hit the company's bottom line.
The soft local currency also resulted in higher costs for imported fuel and plane leasing, Korean Air said.
Fourth-quarter sales were KRW2.71 trillion, higher than the KRW2.3 trillion a year earlier.
Shares in Korean Air ended up 0.15 percent, lagging the wider market's 1.42 percent gain. The stock had fallen 1.8 percent after the results.
Korean Air said it would invest KRW870 billion this year to introduce new aircraft and to build a cargo terminal in China.
Separately it said it ordered two additional A380 superjumbo jets from European aircraft maker Airbus, bringing its total A380 order to ten.
