South Korea’s largest full-service carrier Korean Air Lines Co., shamed by the owner family’s power abuse scandal, posted a 4.3 percent drop in operating profit in the first quarter ended March this year.
The nation’s flag carrier announced in a regulatory filing on Tuesday that its operating profit on a non-consolidated basis in the January to March period fell 4.3 percent from a year earlier to 176.8 billion won ($163 million). Revenue rose 7.4 percent to 3.2 trillion won and net profit amounted to 23.3 billion won.
Its poor results compare with other domestic airliners that posted strong earnings in the first quarter due to increased air passengers and freights.
On Wednesday, shares of Korean Air Lines fell 1.32 percent to close at 33,700 won.
“Sales rose in the first quarter thanks to the sound international flight and cargo businesses, but operating profit fell as the incentive we had paid out to all employees last year was reflected in the first quarter financial statements,” an official from the company said.
The number of passengers it serviced in the January to March period rose 5 percent from the same period a year ago. The number of travelers to Europe increased 7 percent, Southeast Asia 7 percent and the Americas 5 percent while those who flew to China dropped 2 percent.
The air carrier said its earnings in the second quarter would improve as it expects air travel demand to increase thanks to the joint venture with U.S. Delta Air Lines Co., recovery in relations with China and the reconciliatory mood on the Korean Peninsula.
It also aims to maintain the growth momentum of its cargo business amid the rising demand for memory chips and IT components, fresh products and e-commerce products. An official from the company said it plans to add 11 jets to increase the number of passenger jets to 149 and cargo jets to 26. It would also work hard to increase profits through the joint business with Delta and the SkyTeam alliance.
By Moon Ji-woong and Choi Mira
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]