Airline News
Asiana and Korean hit by MERS losses
August 17th 2015
Korean Air Lines, South Korea's largest carrier, posted a second-quarter net loss of 169.2 billion won ($144 million) from significant passenger reductions following the Middle East Respiratory System (MERS) outbreak in May, a sharp decline from the 361.8 billion won profit reported a year earlier. Read More » For the first-half, a consolidated net loss of 302 billion won, reversed from a 206 billion profit in the year-ago period, also was dragged down by forex losses as the won lost value against the greenback.
Despite the first-half loss, Korean Air has forecast a rosy outlook for its passenger and freight units. "For the passenger sector in the third quarter, we expect overseas demand to pick up, given the July-August peak season and the Korean Thanksgiving holiday in September, as well as the de facto end of the MERS outbreak," the company said in a press release. "Our freight business is expected to grow in the next quarter on the back of increased global demand."
Rival carrier Asiana Airlines posted its second quarter results a day earlier than Korean Air. It too, was hit hard by MERS. Asiana recorded a second-quarter net loss of 85.4 billion won ($72.4 million), deepened from a net loss of 11.8 billion won in the corresponding year-ago period. For the first-half, the Star Alliance carrier incurred a net loss of 25.8 billion won, narrowed from a 58.3 billion first-half net loss last year. Asiana’s second-quarter cargo revenue fell 13.5%, which it attributed to weak demand in Europe.
The now-subsided MERS outbreak has dealt a heavy blow to air carriers in the last few months as the health scare prompted foreign tourists, especially from China, to cancel travel to South Korea. The country’s carriers suspended approximately half their weekly capacity between South Korea, China, Hong Kong, Japan and Taiwan in June and July. The Korean carriers’ moves were replicated by the regional competition as airlines from Mainland China, Hong Kong, Taiwan, Japan and Thailand reduced frequencies and capacity to Seoul and beyond. Numerous route launches were cancelled, including Korean Air’s Hefei, Guiyang and Nanjing services.
