Korean Air May Double Profit on New Routes, Asia Services
Unconsolidated operating profit, or sales minus the cost of goods sold and administrative expenses, may climb to 820 billion won ($730 million) this year from 394 billion last year, the Seoul-based company said in an e-mailed statement today. Sales may rise 9 percent to 12.8 trillion won.
The carrier expects a 5.2 percent jump in passengers as it bolsters services to Asian cities such as Hong Kong and Beijing, and begins new routes including to London Gatwick and Nairobi, Kenya. Korean Air will also get its sixth Airbus SAS A380 plane this year as it challenges Singapore Airlines Ltd. and Cathay Pacific Airways Ltd. (293) for business flyers.
“Adding Asia routes may help win passengers as demand is high in the region,” said Park Eun Kyung, an analyst at Samsung Securities Co. in Seoul. “However, there will also be an increase in competition.”
Korean Air expects to receive 14 new planes this year, when it plans to spend 1.56 trillion won on aircraft purchases, 35 percent less than in 2011. The carrier received five A380s last year.
The airline’s consolidated fourth-quarter net income rose almost sixfold to 146.1 billion won from a year earlier. That was lower than the 168.4 billion won average of 12 analyst estimates compiled by Bloomberg. The carrier booked a 226.6 billion won foreign-exchange gain compared with a 151.2 billion won loss a year earlier.
Operating profit in the period dropped 35 percent to 76.6 billion won and sales rose 8.5 percent to 3.19 trillion won.
The airline also plans to begin services from South Korea’s Incheon airport to Danang in Vietnam and Urumqi, China this year. It made its 2012 projections based on an expected oil price of about $121 a barrel and assuming that the won will average about 1,080 won against the U.S. dollar.
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