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Asiana Airlines operating profit up 49%, receives second A350
August 18th 2017
South Korea’s second largest carrier, Asiana Airlines, has reported solid growth in the second quarter to June 30, following an easing of tensions with China. Read More »
Star Alliance member Asiana posted a 48.7% year-on-year increase in operating income for the second quarter, to 42.8 billion won (US$37.5 million). Sales improved 8.5%, to 1.49 trillion won, during the period. Both results are the best second quarter figures the carrier has posted since 2011.
Nevertheless, Asiana’s net loss widened to 74.8 billion won in the three months to June 30, largely due to foreign currency losses. The airline has rejigged its network by deploying more capacity to Japan and Southeast Asia instead of China.
Following a dispute over Korea's deployment of the U.S. THAAD system, China has urged travel agencies to stop selling South Korea to China's ballooning outbound visitor market. Capacity between the countries declined by 29% in the first half.
To compensate for the shortfall, Asiana has launched major marketing campaigns to promote its routes to Europe and the U.S. in the hope of siphoning transfer traffic from Chinese and Japanese carriers. Its efforts appear to be paying off. Asiana says its second quarter revenues on flights to Europe have grown 55% year-on-year.
On the domestic front, revenues improved by 11% as travel to Jeju Island continues to boom. Cargo also performed well; revenues rose 23.8% year-on-year, benefiting from strong semiconductor trade.
“To maintain stable growth in sales, we will conduct a rigorous analysis on potential internal and external risks,” Asiana said. “We will operate A350 aircraft in our mid- to long-haul routes to secure competitiveness. For the cargo sector, we are planning to operate freighters based on fluctuating demand and increase sales for premium cargo products.”
Asiana is investing heavily in a fleet upgrade. It has 30 A350s on order from Airbus, two of which have been delivered until now.
The Seoul-headquartered carrier is deploying the XWBs on routes to Hong Kong and Manila at the moment, but plans to deploy them long-haul to London and San Francisco from August, replacing ageing B777-200ERs. Asiana has eight -800s, twelve -900s and ten -1000s on order.
The -800 has failed to meet its projected demand. Asiana remains the sole customer for the smallest A350 variant after other airlines converted their orders to the A330neo. Speaking to FlightGlobal in April, Airbus executive vice-president of programmes, Didier Evrard, said Airbus was in discussions with Asiana on the demise of the -800.
“We are trying to discuss with the customer [Asiana] the best solution to fulfil the requirements of the -800," Evrard said. Options include adding to the Kumho Group carrier’s -900 backlog or converting the order to the A330neo, according to Evrard. For now, the A350-800 remains “on hold”.
For the airline, the A350 marks the arrival of a new Airbus aircraft type. Asiana operates A320s, A321s, A330s and also has six A380s in its fleet that fly to Frankfurt, Los Angeles and New York.
Asiana’s A350-900 is configured with a three-class layout with a total of 311 seats, comprising 28 fully-flat beds in business class, 36 premium economy and 247 economy class seats.
Premium economy is a new service class for Asiana, offering 3-4 inches of extra legroom, much like United Airlines’ ‘Economy Plus’ section. Asiana’s long-haul premium economy passengers will be offered business class lounge access, upgraded in-flight amenities and priority boarding.
In the long term, it is expected that Asiana will increase its cooperation with the HNA Group carriers. The Mainland conglomerate already owns a minority stake in Kumho. HNA is keen to acquire additional equity.
Last year, Kumho Asiana Group chairman, Park Sam-koo, met with HNA Group CEO, Adam Tan, to identify areas for cooperation. In their first joint venture, Asiana and HNA have launched Gate Gourmet Korea, an in-flight catering firm. HNA owns Gate Gourmet Switzerland GmbH.
