Korean Air’s operating profit falls to $360 mn in Q2 2023

Korean Air Lines Co.’s operating profit in the second quarter fell over 30% from the same period last year in line with market consensus.

Considering that the second quarter is considered a traditional off-season for the airline industry, the performance evaluation was positive.

Korean Air on Wednesday said it posted provisional results of 3.53 trillion won ($2.6 billion) in sales and 468 billion won in operating profit in the second quarter. Sales increased 6% year on year but operating profit fell nearly 36%.

Sales were 5.7% lower than the market forecast, but operating profit was 1.8% higher. The results were similar to the first quarter, whose sales were 3.59 trillion won and operating profit 485.6 billion won.

Lower profitability in the second quarter was because of lower cargo demand and freight rates. Airport operating and flight costs also rose due to higher demand for overseas travel.

Cargo sales recorded 963.8 billion won, down 56% year on year, due to falling air freight rates given more belly cargo with international airliners resuming service. Passenger sales jumped 154% to 2.2 trillion won.

“Despite the simultaneous drop in cargo volume and freight rates, passenger results and cost cuts due to falling oil prices stood out,” Hanwha Investment & Securities researcher Park Soo-young.

The outlook is also bright for the third quarter, which is considered the top peak season for the airline industry.

“In the third quarter, we expect better performance thanks to the peak season marked by school summer vacation and the Chuseok (Thanksgiving) holiday,” a Korean Air source said. “We will expand irregular flights to popular vacation destinations.”

Write to Mi-Sun Kang at misunny@hankyung.com