Korean Air’s full-year operating profit declined by 56.4% due to a sharp decline in cargo revenues, against a weak economic backdrop.

Operating revenues were down by 2.8% to W12.3 trillion ($10.4 billion), dragged lower by a 15% decline in cargo revenues. This was partially offset by a marginal increase in passenger revenues, which accounts for over 60% of operating revenues.

Operating expenses were largely steady at W12 trillion, as lower fuel costs were offset by higher labour costs and an increase in airport fees.

This sent operating profit tumbling from W667 billion in 2018 to W291 billion in the year recently ended.

Against a 1.2% increase in ASKs, the carrier’s RPKs were up by 3.8%, pushing load factor up by 2 percentage points to 82.4%. Yield, however, declined by 3.3% to W93.

The carrier attributes increased passenger traffic as a preemptive response to negative market trends. It sees a sustained increase in trans-pacific demand from its joint venture with Delta, from which it expects to grow transit demand and increase domestic connections, while expanding mainstream corporate sales in the United States.

Meanwhile, growth markets such as Southeast Asia have offset declines in its Japan and Hong Kong networks. The carrier plans to increase the frequency on services to Los Angeles, Boston, Singapore, and Delhi, alongside its recently announced expansion into Budapest.

In the cargo segment, FTKs were down 9.8% against a 3.3% decline in unit capacity. As a result, load factor shed 5 percentage points to 71.4%, while yield was 5.9% lower to W342.

The carrier attributed weakness in the segment to prolonged US-China trade tensions and a global slowdown in trade.

It seeks opportunity in growth markets such as Eastern Europe, China, and South America, as well as new and high-margin sectors.

For both passenger and cargo segments, Korean is looking at optimising either flight patterns or capacity, with the use of charters to capture demand.

As at 31 December 2019, the carrier’s current assets stood at W3.26 trillion, down 8.7% from last year.

It has 146 passenger aircraft in its fleet – 105 widebodies and 41 narrowbodies – having added two Boeing 777 and one Airbus A220, while phasing out one 737, between January and December 2019. Its freighter fleet held steady at 23.