Korean Air reports 1Q2011 net profit of USD263m, orders five A330s

Korean Air reported a 7.2% increase in revenue in 1Q2011, and a 41.2% increase in operating profit to USD152.2 million. Net profit jumped almost 50%, aided by strong foreign currency gains and shareholding gains from affiliates. Korean Air shares fell 0.7% on Tuesday, after gaining 6.6% on Monday.

Korean Air financial highlights for the three months ended 31-Mar-2011:

  • Operating revenue: USD2634 million, +7.2% year-on-year;
  • Operating costs: USD2483 million, +12.9%;
  • Operating profit: USD152.2 million, +41.2%;
  • Net profit: USD263.3 million, +49.5%;
  • Passenger traffic (RPKs):
    • Domestic: -4.3%;
    • International: +3.0%;
  • Load factor:
    • Domestic: 58.8%, +1.3 ppt;
    • International: 77.7%, +0.7 ppt;
  • Passenger yield**:
    • Domestic: USD 16.7 cents, +3.7%;
    • International: USD 8.8 cents, +11.4%;
  • Cargo traffic (FTKs): -1.6%;
  • Cargo load factor: 75.5%, -1.6 ppt;
  • Cargo yield**: USD 30.59 cents, +2.7%.

* Based on the conversion rate USD1 = KRW1070.96

** Reported in USD

Korean Air also announced a firm order with Airbus for five A330-200s, increasing the number of A330s ordered by the carrier to 30, of which 23 have been delivered. As with the existing Korean Air A330 fleet, the new aircraft will be powered by Pratt & Whitney engines. Korean Air plans to invest USD1.6 billion to acquire seven aircraft from Boeing and Airbus betwen 2013 to 2015. The carrier expects to commence A380 services from Jun-2011 and take delivery of B787s in 2016, five years later than initially expected.

Cathay Pacific's new CEO John Slosar stated the carrier expects load factors to average around 79-80% in 2011, down from 84% in 2010, due to increased capacity. The annual load factor in Japan may decline by 1% in 2011 due to the earthquake, having having a flow-on effect onto the carrier's overall load factors. Japan load factors are currently around 50%, 25 to 30ppts below normal

Mr Slosar listed oil as one of the carrier's largest challenges, lowering the company's yield, which had finally returned to the levels experienced prior to the 2008 global financial crisis. Cathay's strong hedging programme and the fuel surcharge would help offset part of the rising costs, although if oil prices continue to rise they are expected to dampen the global economy and demand for air travel. He noted fuel surcharges could cover around half of the additional fuel costs.

Qantas Airways reported the following traffic highlights in Mar-2011: