Asiana Airlines' losses continue in 1Q2014 as capacity growth drags down yields despite fuel savings

Asiana Airlines continues to diverge from Korean Air, which cut capacity and grew revenue while returning to the black. Not so for Asiana, which in 1Q2014 grew capacity but reported a 4.1% international yield decrease. While its situation improved, Asiana remained in the red. Lack of stability in the Korea-China and Korea-Japan markets, large in overall size and yield, continue to impact Asiana.

Asiana benefitted from reduced fuel costs, but unlike Korean Air did not display large cost discipline in other areas of its business.

Further changes do not paint a rosy picture as North Asia-Southeast Asia and North America-Asia competition increase. Asiana wants to reduce its exposure to short-haul traffic, requiring growth in long-haul services as well as to Southeast Asia for transfer traffic. Incremental long-haul expansion is occurring to Istanbul, Paris and Seattle while Asiana's recently-delivered A380 will help accelerate long-haul growth.