Korean Air finalizes an order for two more Boeing 777-300 ERs, returns to an operating profit in the 2Q

Korean Air (Seoul) has finalized an order for two additional Boeing 777-300 ERs (Extended Range) airplanes. The order is valued at $596 million at Boeing list prices.

Korean Air currently operates 34 777 airplanes that include 10 777-300 ERs. With this order, the airline has six more 777-300 ERs on order with Boeing. The airline became the first airline in the world to operate both the 747-8 and 777 Freighters when they were added to its fleet after a historic double airplane delivery in February 2012.

On the financial side, the company returned to an operating profit in the second quarter. The airline issued the following financial report for the second quarter:

“Korean Air, South Korea’s flagship airline, announced its financial results for the second quarter of 2012 ended June 30, 2012.

The airline posted operating income of 3,119 billion KRW for the second quarter of 2012, a year-on-year increase of 9.9%. Operating profit turned to black from a loss of 38 billion KRW in the same period of last year to a profit of 100 billion KRW. International passenger and cargo businesses remained the major revenue contributors for the airline, accounting for 56.8% and 25.1% of the operating revenue respectively.

International Passenger Business

During the second quarter of 2012, it saw increased traffic across all routes, including the Commonwealth of Independent States (CIS, up 41%), Japan (up 28%), China (up 18%) and Europe (up 15%). International passenger segment recorded a year-on-year growth of 10.1% and 9.0% in passenger traffic and carrying capacity, reaching 16,232 million RPK and 20,540 million ASK respectively. Overseas outbound traffic lifted 18%, with 21% and 15% increase in Korea inbound traffic and transit respectively.

To cater the growing demand in summer, the airline will increase passenger carrying capacity in high demand routes. With the introduction of new Incheon – Yangon route in the third quarter, as well as stepping up frequency on selected routes, such as Incheon – Jinan, Incheon-Kunming, Incheon-Okayama, Incheon – Guam, Incheon – Paris etc., the airline sees potential growth in passenger traffic.

With stabilized jet fuel price and exchange rate, the airline is expected to see improvement in profitability.

Cargo Business

Cargo traffic recorded a year-on-year fall of 12.2% to 2,013 million FTK as it saw a Y-o-Y decrease of 9% in Korea outbound traffic and transit traffic respectively. While transit traffic from Japan reported a slump, transit traffic from Oceania recorded increase of 47%. Direct flight between Shanghai and Americas was also put into operation in the second quarter.

Benefiting from the London Olympic Games and seasonal high demand in the third quarter, cargo traffic is expected to recover gradually. In an attempt to address environmental issues and high jet fuel price, Korean Air will introduce fuel efficient and environmental friendly aircraft to the fleet. The airline will strive to enhance profitability and sustain growth by developing new markets such as South America and Africa.

Korean Air will continue to expand its business prudently while enhancing the quality of its service for the remaining of the year. With its long-standing commitment to achieving “Excellence in Flight”, Korean Air aims to provide the best quality to its customers while bringing the best returns to its shareholders.

* Exchange rate on June 30, 2012: 1 US Dollar = 1,153.8 KRW”

Copyright Photo: Michael B. Ing. Boeing 777-3B5 ER HL8208 (msn 37645) climbs away from Los Angeles International Airport.

Korean Air: