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Airlines

Largest domestic carrier Korean Air posts Q3 surplus; peers swing negative

Nov 05, 2020 (Gmt+09:00)

South Korea’s flag carrier Korean Air Lines Co. has posted an operating profit for two straight quarters thanks to robust cargo operations keeping the airline afloat in the global pandemic era.

The company posted a provisional 7.6 billion won ($6.7 million) in operating profit and 1.5 trillion won in revenue in the third quarter, according to the company's regulatory filing on Nov. 5. Korean Air is the only airline among the major global airlines to post surpluses for two consecutive quarters

The domestic airline's Q3 earnings come as a surprise since many market watchers expected the company to swing negative as other global airlines have also expanded their cargo operations, anticipated to have reduced Korean Air's cargo shipping foothold.



Korean Air's industry peers did not fare as well, as Delta Air Lines Co. and American Airlines Co. posted net losses of $5.4 billion and $2.4 billion, respectively, in Q3. Air France-KLM also swung to a loss, posting a €1.05 billion operating loss.

Despite the company's sales shrinking 52% year on year on an over 90% decline in passenger traffic, Korean Air maintained its profitable streak owing to its focus on cargo operations. 

Korean Air has dealt with the aviation crisis by strengthening its global cargo networks, utilizing freighters, and riding on its years of experience in the cargo business.

In September, Korean Air converted two of its passenger planes into cargo planes to further boost its cargo services. The company also aggressively sought out clients' services to increase its cargo loads, which helped maximize profits.

A Korean Air passenger plane being converted into a cargo carrier

A shift from passenger to cargo operations has kept Korean Air in profit


Meanwhile, the flag carrier's successful quarterly profits did not come without a cost, as its executives and employees were asked to help bear the brunt of the COVID-19 impact. Since April, around 70% of the company's total employees, or some 10,000, have been taking rotational monthly leave. Executives have also folded up to 50% of their pay.

Korean Air does not expect to see passenger traffic recover in the fourth quarter due to the prolonged pandemic era. But the company is hoping to see its air cargo demand rise given the shortage of container shipping.

Write to Kyung-min Kang at kkm1026@hankyung.com

Danbee Lee edited this article.

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