LONDON – The airline could say Anyong to the pandemic. That’s goodbye in Korean. The airline’s robust move to focus on Cargo services ramps propels Korean Air to Q12022 operating profit.
The South Korean flag carrier reported revenue of KRW 2.8052 trillion ($2.3168 billion) and a “record quarterly operating profit” of KRW 788.4 billion ($651.1 million) in its first quarter of this year’s financial results.
The airline decided to make use of its grounded passenger jets to operate cargo charter flights. This increased the airline’s market share for freighter operations.
In fact, during the same quarterly period of 2021, the airline was performing relatively well. Korean Air recorded revenue of KRW 1.7498 trillion ($1.4452 billion) and an operating profit of KRW 124.5 billion ($102.8 million).
A figure where this will put other airlines into an envious position.
Korean Air stated: “The airline was able to respond proactively to the global supply chain disruptions and operational restrictions caused by the Omicron variant, and provide clients with reliable services,” Korean Air said in a statement.”
Moreover, the airline added on its website: “Korean Air is taking preemptive measures to maintain its air cargo capacity through close management of ground handling operations and flexible network operations.”
Better Days Ahead as Passenger Traffic is set to rise
Despite the country witnessing the growth of the Omicron variant, the airline expects its business to recover fast, as more countries are easing travel restrictions including South Korea.
In Q12022, the airline’s passenger operations generated KRW 359.8 billion or $285 million worth of revenue.
The airline added: “The recovery of passenger demand will vary by route and region, and the airline will closely monitor and flexibly respond to the market and changing quarantine policies of its network.”
South Korea on March 21st lifted the mandatory quarantine for fully vaccinated travelers.
The airline further added: “Recovery in global passenger demand is foreseen to gradually boost global air cargo capacity, but instability in regional air cargo markets is expected to persist due to major Chinese city lockdowns and the war in Ukraine.”
In addition to this, the airline’s financial performance is set to increase due to its debt reduction campaign.
The airline’s debt ratio declined from 814% at the end of 2019 to 255% during the first quarter of 2022.
This is significant as this is a 559% reduction, making this the airline’s lowest debt ratio since 2011.
Korean Air is not alone in shifting to the ‘cargo’ strategy. Large Asian Airlines including, China Airlines, Cathay Pacific, and Singapore Airlines have resulted in shiting towards cargo operations.
In December of last year, China Airlines posted record air freight revenues of T$15.4 billion ($554.08 million).
Airlines in the Asia Pacific are increasing their share of the revenue on cargo operations against the passengers, to ride out the uncertainty surrounding a volatile 2022 market.
