Asia-Pacific carriers had a disappointing first three months of 2013, posting bigger operating losses with higher and substantial net losses, mainly weighed down by weakness in Korean Air.
Nine major Asia-Pacific network carriers with fiscal first quarters ended 31 March generated a cumulative operating loss of $34 million compared with a loss of $6 million in 2012. They also posted a net loss of $158 million, compared with last year's first quarter net profit of $98 million.
Cumulative revenues, however, rose by 2.8% to $19 billion in the first quarter, led by China Southern with $3.8 billion.
The two carriers most responsible for the weak operating and net profits were China Eastern Airlines and Korean Air.
China Eastern's operating loss widened to $117 million from $31 million in 2012. It also posted a first quarter net loss of $27 million, compared with a net profit of $29 million in 2012.
Korean Air posted a first quarter operating loss of $129 million, compared with a loss of $105 million a year earlier. Its net losses widened significantly to $286 million from $74 million in 2012.
In the first quarter, Korean Air recorded a 13% drop in cargo traffic compared with the year before. This was a result of a 12% year-on-year decrease in South Korean outbound traffic and an 18% drop in transit traffic.
Association of Asia Pacific Airlines director general Andrew Herdman says the cargo market has been stagnant for nearly three years and that a recovery expected last year did not materialise. "2011-12 has been moribund and that has taken everyone by surprise."
All Nippon Airways (ANA) and Japan Airlines' (JAL) fiscal year 2012 ended on 31 March. ANA's operating profit rose by 7% to $1.2 billion and its net profit rose by 53% to $518 billion, with revenues rising by 5.1% to $17.8 billion.
ANA chief executive Shinichiro Ito said that despite the challenging global economy, the airline performed strongly in FY2012.
"We were successful in attracting more passengers, both at home and abroad, and in responding to changes in the airline environment, including the expansion of airport capacity in the Tokyo metropolitan area, further airline liberalisation and the entry of low-cost carriers to the market."
As for JAL, its 2012 operating profit fell by 5% to $2.3 billion, while its net profit fell by 8% to $2 billion.
JAL said that although post-quake restoration continued to drive the Japanese economy in the fiscal year, the rebound was blunted by a slowdown in the global economy. The entry of low-cost carriers into the market and fierce competition among legacy carriers resulted in an increase in supply of capacity.
"In addition to rising fuel prices, the Japanese yen weakened and triggered a rise in fuel costs. As such, the JAL group finds itself in a tough operating environment."
For Singapore Airlines' FY2012/13 ended 31 March, the carrier's operating profit fell by 20% to $185 million while its net profits rose by 13% to $305 million.
During FY2012/13, SIA's capacity as measured in ASKs rose by 4.3%, while traffic as measured in RPKs rose by 6.8%. This pushed its load factor 1.9 percentage points higher to 79.3% for the year.
SilkAir's ASKs rose by 20% during the year, but its RPKs grew by just 17%. Consequently, its load factor for the year fell by 2.1 percentage points to 73.6%.
SIA warns that the global economic outlook will remain challenging and singled out cargo as a challenging area.
"Yields are likely to remain under pressure amid weak economic sentiment and revenues will be further diluted if key revenue generating currencies continue to depreciate against the Singapore dollar. The cargo business faces an additional issue of overcapacity in the market, which will add pressure on loads and yields. Furthermore, fuel prices remain persistently high."