Korean Air (KAL), Thai Airways International and China's Hainan Airlines are all citing high fuel costs as contributors to a slump in financial performance so far this year.

The Korean airline revealed a net loss in the first half of 2000, which it says is due to fuel costs and aircraft acquisitions. Hainan has blamed high landing fees along with fuel as being responsible for a 60% profit drop. Thai says fuel costs and a weak baht forced its third quarter results into the red.

KAL lost 197.7 billion won ($176.6 million) to the end of June, compared with a net profit of 229 billion won for the same period last year. This came despite a 17% increase in revenues from 2.19 trillion won in the first half of 1999.

The airline blames the loss on aircraft purchases, as well as a 67% rise in fuel costs over the past year, prompting the airline to ask the Government for permission to increase cargo fees by 10 to 20%.

Hainan has reported a 26.5 million yuan ($3.2 million) profit, compared with last year's first-half 66 million yuan. Fuel costs were 70% higher, at 214 million yuan, dulling the effect of a 32% rise in ticket sales, which reached 1.08 billion yuan, compared with last year's figure of 812.2 million yuan.

The domestically-focused airline has pledged to meet its full-year profit target by strict control of costs, although its options for hedging against fuel costs are limited by its dependence on state-run China Aviation Oil Supply (CAOSC). Its passenger traffic has risen 56% to 1.72 million.

Thai has reported a net loss of 1.17 billion baht ($28.7 million) in the third quarter to the end of June, compared with a net profit of 2.56 billion baht a year ago. The carrier suffered foreign exchange losses of 3.58 billion baht, compared with gains of 2.1 billion last year.

Flight operation costs rose 51% to 5.46 billion baht, from the previous year's 3.62 billion baht. This offset a 16% increase in operating revenue to 29.28 billion baht. For the first nine months, Thai posted a profit of 8.57 billion baht, down from last year's 11.23 billion baht.

Source: Flight International