Korean Air’s focus on cargo operations appears to have paid off, as it reports a profitable second quarter that outperformed the year-ago period.
The airline saw revenue decline 44% year-on-year to W1.69 trillion ($1.4 billion), as the Covid-19 pandemic led to a sharp decline in passenger demand.
Despite that, it reports a W149 billion operating income and W162 billion net income for the April to June period, compared with a W102 billion operating loss and net losses of W381 billion a year before.
“This is because Korean Air has been focusing on its freighter business, by increasing the operation rate of freighters and maximising cargo supply on its passenger planes,” the carrier says today in a statement about its unaudited second-quarter financial statements.
The airline reports a 17.3% year-on-year increase in freight ton kilometre (FTK), and cargo sales nearly doubled over the same period, from W596 billion to W1.23 trillion.
It says: “While the sharp decline in the number of passenger flights has made it difficult for the airline to make use of belly cargo, Korean Air responded by increasing the operation rate of freighters by 22% year-on-year through strict maintenance checks and oversight, increasing supply by 1.9%.”
Meanwhile, revenue passenger kilometres (RPK) declined 92.2% year-on-year, but Korean notes that domestic demand, especially on routes to popular tourist destination Jeju Island, has been recovering since April. Demand for international travel has also gradually improved since June.
In the second half of 2020, Korean plans to maximise revenue by transporting time-sensitive, high-priced cargo, citing as examples disinfectant products, e-commerce goods, semiconductor devices and automobile parts.
It intends to expand its freight capacity further by removing seats from passenger aircraft to use as freighters.
In May, Korean reported that first-quarter revenues declined by 22.7% year-on-year to W2.35 trillion. Operating losses came in at W56.6 billion, alongside W692 billion in net losses.