Korean Air’s Q3 Operating Profit Tops 400 Billion won

Korean Air Chairman Cho Won-tae. (Photos: Korean Air)

Korean Air surpassed expectations in the third quarter of this year on the back of rising air freight charges. As the fourth quarter is coupled with a year-ending shopping season and the logistics industry’s high-season, the airliner will likely see its business performance improve in the second half.

Korean Air said in an electronic filing on Nov. 12 that it posted 2,227 billion won in sales and 438.6 billion won in operating profit in Q3.

The operating profit surpassed the market consensus, as securities companies’ average estimate was 280.9 billion won. Korean Air chalked up more than 400 billion won for the first time in five years, since the airliner achieved the milestone in 2016.

By business, Korean Air logged 1,650.3 billion won in sales in freight, similar to that of the 3rd quarter of 2020 when the airliner posted 1,550.8 billion won in sales.

The reason is that cargo volumes were spilt over into air freight due to the recent shipping space shortage.

Figures, made available by the Air Portal, showed that cargo volumes, handled by Korean Air during the month of October, stood at 144,146 tons.

Stagnated global supply chains have pushed up air freight demand, leading to its good business performance on the back of rising air freight fares, a Korean Air official said.

Airline industry sources said Hong-Kong-North America route rates based on the air freight index powered by TAC data jumped to $9.94 per kg in October, an over three-fold surge over $3.14 in January 2020 before the global spread of the COVID-19 pandemic.

The cargo business is predicted to get better as year-end is approaching. The fourth quarter of each year is a period with rising freight volumes thanks to a high-season such as Christmas, Thanksgiving and Black Friday Day.

Korean Air plans to make the most of its cargo planes Sixteen passenger aircraft, including 10 B777s and six A330s, have been converted into cargo planes.

The airliner plans to raise the operation rate of large-sized freighters, including B747s.

The passenger business said demand has not yet rebounded due to the effects of the pandemic. Demand is most likely to expand in the fourth quarter of the year, on the back of expanded occulting of vaccines against the pandemic and the signing of travel bubble agreements.

Korean Air says it plans to expand supply by flexibly operating regular and non-regular flights with a focus on area with exemption of social distancing measures such as Hawaii, Guam and Spain.

Asiana Airlines is to announce its Q3 business performance outcomes on Nov. 15.

The airliner is estimated to post 1,075 billion won in sales and 64 billion won in operating profit in Q3.

The figures represent a 29 percent surge and a 377 percent jump over the same period of last year, respectively.

Asiana Airlines is presumed to have logged an operating profit for the second straight quarter since 2021 Q2. The airliner is analyzed to see almost half of its Q3 sales come from the freight business.

(from left) KT President Park Jong-wook, President Woo Kee-hong of Korean Air, President Kim Kyung-wook of Incheon International Airport Corp., President Shin Jae-won of Hyundai Motor and President Yoon Young-joon of Hyundai Construction Co. participate in a ceremony to sign an MOU to develop Korean Urban Air Mobility (K-UAM) at Paradise Hotel in Incheon on Nov. 16.