Low-cost carriers in S.Korea returning to profitability

South Korea's low-cost carriers (LCC) Jeju Air Co. and Jin Air in the fourth quarter last year each earned operating profit for the first time since the outbreak of the COVID-19 pandemic.

The recovery of profitability by the two LCCs has analysts saying the airline industry has started its escape from its coronavirus-caused business blues.

Jeju Air on Tuesday announced sales of 299.4 billion won ($238.7 million) and operating profit of 18.7 billion won in the fourth quarter last year based on consolidated financial statements. Sales skyrocketed 241% from the fourth quarter of 2021 and operating losses returned to the black.

The carrier's surplus was its first in 15 quarters dating back to the first quarter of 2019 mainly thanks to Jeju Air's preemptive expansion of routes to Japan. The company resumed service on major Japanese routes in line with Japan's restoration of visa-free entry in October last year, including those to Tokyo's Narita International Airport as well as Osaka and Fukuoka.

"Increased travel to Japan accelerated the earnings rebound," a Jeju Air source said. "The cost-efficiency strategy through single model operations became the secret to overcoming the crisis of high levels of foreign exchange, oil prices and interest rates."

Competitor Jin Air had sales of 225.4 billion won and operating profit of 11.6 billion won in the fourth quarter. Its number of international passengers in the period was about 660,000, or 63% of that in the fourth quarter of 2019 before the pandemic hit.

Write to Jae-Fu Kim at hu@hankyung.com