Korean Air Returns to Profit on Record International Traffic
Net income was 340 billion won ($310 million), compared with a loss of 536.3 billion won a year earlier, Seoul-based Korean Air said in a statement today. That was in line with the 340.1 billion-won average of 15 analysts’ estimates compiled by Bloomberg. Sales rose 2.6 percent to 3.4 trillion won.
The carrier plans to add 55 new aircraft, including five Airbus SAS A380s, by 2018 as it challenges Singapore Airlines Ltd. (SIA) and Cathay Pacific Airways Ltd. for business fliers. Korean Air is also bidding for a 42 percent stake in the nation’s only planemaker as it seeks to expand its aerospace operations.
The carrier said it expects sales from premium seats to rise 15 percent this year to 1.62 trillion won after boosting business-and first-class seats with the addition of its five A380 superjumbos.
Operating profit, or sales minus the cost of goods sold and administrative expenses, jumped 31 percent to 313 billion won, the company said.
Standalone operating profit, which excludes income from units, may rise to 507.8 billion won this year from 394.1 billion won in 2011, the carrier said. It didn’t provide a forecast for consolidated operating profit.
The airline’s international passenger traffic in the quarter, measured by revenue passenger kilometers, climbed 4.3 percent from a year earlier to a record. That helped offset a decline of 8.2 percent in cargo traffic.
Revenue from its European routes rose about 21 percent in the January-September period while the contribution from U.S. routes increased 9 percent, vice president Lee Sang Kyoon said at a press conference in Seoul today.
Korean Air is vying with Hyundai Heavy Industries Co. to buy the 42 percent stake in Korea Aerospace Industries Ltd. (047810) The carrier’s aerospace division already makes parts for Boeing (BA) and Airbus planes. The stake sale may be completed by year-end.
“We’re confident that our purchase of Korea Aerospace will create positive synergy as we’re already in that business,” Lee said. “We want to tap the highly-skilled and experienced technicians at Korea Aerospace, too.”
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