South Korean budget carrier Jeju Air blamed “sudden changes in external environment” as it slipped into a W31.4 billion ($ million) operating loss for the second quarter, driven primarily by higher fuel costs.
By comparison, for the quarter ended June 2018 it reported a W11.9 billion operating profit.
Operating revenue for the three months to the end of June was up by 9.9% to W311 billion ($257 million), driven by an 8.7% growth in its passenger business segment.
The carrier notes that passenger revenues from domestic and Japanese routes declined slightly, but it enjoyed 33% growth on China routes, while Southeast Asia expanded by 19%.
Jeju’s ASKs rose by 28%, driven by international expansion, however RPK growth of just 17.5% saw load factor fall by 5.5 points to 85.3%
Revenue growth was, however, wiped out by a 25% increase in cost of goods sold, driven by a 28% hike in the carrier's fuel costs.
The carrier reported a net loss of W23.4 billion for the period, versus a W16.5 billion net profit over the previous corresponding period.
In its outlook, the carrier says that it will take "preemptive and active efforts to boost profit" over the second half. These include plans to launch six new destinations in China, while the addition of two more aircraft to its fleet will help to increase frequencies on existing routes to China.
That appears to be in response to lower demand for travel between Korea and Japan due to a diplomatic stoush between Tokyo and Seoul.
Jeju adds that it is adjusting capacity across its network to focus on profitable routes, such as Guam and Cebu, while also targeting cost reductions across its operations.