The carrier’s operating profit fell by only 17% while gross sales reduced by more than 40%
Seoul-based flag carrier Korean Air reported an operating profit for 2020, in spite of the unprecedented industry downturn caused by the COVID-19 pandemic.
At a boarding meeting today (February 4), the airline revealed tentative financial results for the year that include revenues of ₩7.405 trillion ($6.8 billion) and an operating profit of ₩238.3 billion ($219 million).
Like most carriers around the world, the operator experienced a decline in traveller demand due to COVID-19 throughout the year, which caused passenger sales to fall by 74% year-on-year.
Meanwhile, the key to Korean’s success appears to be its cargo division which increased sales by 66% compared to the previous year. This was done by increasing the operation rate of freighters and utilising idle passenger examples.
Paired with company-wide efforts to cut costs and the result was a drop in operating profits of only 17% from 2019 levels.
“Almost 24% of the global air cargo capacity disappeared last year when airlines suspended most international flights because of COVID-19,” Keehong Woo, Korean Air’s president, commented. “However, [we] boosted our cargo operations by operating extra/charter freighters to meet the demands of medical supplies such as COVID-19 test kits and masks. We also increased cargo capacity by converting passenger jets into freighters. We’ve done well to keep our cargo network strong and active.”
However, net income remained negative and stood at ₩228 billion ($209 million) for 2020. Although this is a reduced amount from 2019’s ₩568 billion ($522 million) net loss.
All this comes as the flag carrier continues in its bid to acquire Asiana Airlines, for which it received the green-light from local courts in December.
In a statement, the carrier said the merger was “for the sake of the Korean aviation industry” and that despite the COVID-19 crisis, its decision to acquire the carrier was “inevitable to enhance the market’s competitiveness and minimise the injection of public funds”.
Going forward, Korean Air says it plans to strengthen its cargo business strategies by flexibly adjusting supply and proactively responding to changes in the market.
In contrast to the positive air cargo market, the passenger division is expected to recover slowly. Accordingly, the operator plans to maintain the current passenger seat capacity until the end of this year when the market indicates meaningful recovery with the COVID-19 vaccine.