News
Asiana Airlines posts quarterly loss despite record operating results
May 11th 2018
Asiana Airlines’ first-quarter operating revenues were KRW64.3 billion, the highest in more than three years, but South Korea’s second largest carrier reported a KRW5.4 billion (US$5 million) net loss for the three months to March 31, largely on foreign exchange losses. Read More »
In 2017, Asiana posted a KRW96.1 billion first-quarter net profit and an operating profit of KRW26.3 billion; KRW38 billion less than this year.
The Star Alliance member’s improved operating performance was achieved with higher revenues of 9%, to KRW1.6 trillion, achieved by a 28% earnings increase on European routes and 9% on its U.S. network. “This suggests that the strategy to expand long-haul flights was a successful one,” Asiana said.
The airline’s budget offshoot, Air Seoul, reported its first operating profit for the first quarter. Air Seoul, founded in 2016, commenced A321 routes from Incheon International Airport to Guam, Hong Kong and Osaka during the first three months. Asiana also owns 46% of LCC, Air Busan, whose first quarter operating profit increased 172% year-on-year. The LCC is planning an IPO by year end.
Asiana’s cargo revenues increased 13% for the reported three months as demand for semiconductors and other IT products continued to soar. Asiana operates eleven B747-400Fs.
Asiana expected to report a full-year net profit as the Korean won was likely to rise against the US dollar, a financial trend that would ease the servicing of the carrier’s foreign debt. It has forecast a minimum 2018 operating profit of KRW380 billion and hoped warmer relations between Seoul and Pyongyang would encourage more tourists to visit South Korea.
Asiana will increase its six U.S. routes to daily service starting this month because of the induction of more A350XWBs into its fleet.
Last month, SMBC Aviation Capital delivered its fifth A350-900 to Asiana, the fifth of a six -900 sale and leaseback deal between the Japanese controlled lessor and the airline. The deal will include the financing of pre-delivery payments due to the manufacturer. SMBC Aviation Capital’s first A350 was delivered to Asiana in April 2017. It will deliver another A350 to the airline this year. Asiana’s fleet will eventually contain 21 -900s and nine -1000s.
Asiana launched a seasonal Venice route on May 1 and will add a four-weekly Barcelona service in August, with both routes operated by “spare” B777 capacity.
The carrier hopes to “optimize [its] capital and debt structure” and improve long-term liquidity. It has raised new loans, sold shares in a logistics firm and issued convertible bonds. The airline has also previously said it wanted to increase cooperation with HNA Group carriers. In 2017, the Mainland conglomerate purchased a minority stake in Asiana parent, Kumho. Asiana has KRW4 trillion in debt, with KRW2 trillion set to mature this year.
Late in 2017, Asiana and HNA launched Gate Gourmet Korea. HNA owns Gate Gourmet Switzerland GmbH. Separately, KDB said it would invest UA$130 million in a “One Belt, One Road project, the expansion of Haikou International Airport, the home city of Hainan Airlines.
