Korean Air targets to turn profit in 2014

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Korean Air has outlined its business plan for 2014, with an aim to turn the operating loss incurred in the last financial year into a profit.

In an investor presentation, the SkyTeam member says the target is to post an operating profit of Korean won (W) 640 billion ($598 million), a sharp reversal from the W18 billion loss recorded in 2013.

The carrier is aiming to achieve this by increasing its operating revenue 7% to W12.5 trillion, while allowing expenses to grow by only 2% to W11.9 trillion. These are on the assumption that fuel price keeps at $130 per barrel, while the won stays at W1080 against the US dollar.

The flag carrier is also targeting to reduce its total capital expenditure for 2014 by 12% to W2.16 trillion. Aircraft related expenditure will hence reduce from W1.85 trillion to W1.64 trillion.

With the reduced aircraft expenditure, Korean Air's fleet will only grow by three aircraft this year to 150. While it is slated to take delivery of seven aircraft (a Boeing 747-8 and a 777 freighter, two Airbus A380s and three A330s), part of these jets will go towards fleet replacement. Its passenger fleet will increase by three to 124 aircraft, while its cargo fleet remains unchanged at 26 aircraft.