News
Cargo boosts operating profit
November 6th 2020
While the bottom line result was a net loss for KAL, the airline posted an operating profit of 7.6 billion won for the three months to September 30, down 94% from 117.9 billion won a year earlier. Read More »
KAL attributed the operating profit to its cargo business. Its freight tonne kilometres (FTK) rose 17.3% year-on-year compared with a 1.9% expansion of capacity, or available freight tonne kilometres (AFTK). With demand outpacing capacity growth, freight load factor rose 10.6 percentage points, to 80.8%, KAL’s results presentation showed.
"We were able to achieve a second profitable quarter due to our strong cargo operations and the sacrifices of our employees,” Cho said. “I am really grateful and proud of our employees for their hard work and dedication.”
KAL’s cargo outlook was positive as the freight business entered its peak season, with forecast high demand for traditional air cargo such as semiconductors, auto parts and e-commerce supplies. The sector also will benefit from urgent demand for COVID-19 prevention medical supplies and the lack of marine transportation availability, such as container ships, KAL said.
In other news from South Korea, Asiana Airlines announced this week it would reduce the number of shares on issue by 66%, following consultation with creditors, to improve its financial structure.
Under the capital reduction scheme, three Asiana shares will be converted to one Asiana share, reducing the total number of shares on issue to 74.4 million, from 223.2 million currently.
In a statement, the company said the decision to undertake the capital reduction was in response to COVID-19’s impact.
Market watchers noted Asiana's liabilities exceeded working capital by 56.3% at June 30. Should it remain above 50% to the end of 2020, the stock would be vulnerable to delisting on the stock exchange and a credit rating downgrade.
In September, a proposed takeover of Asiana by a consortium led by Hyundai Development Company (HDC) and Mirae Asset Daewoo was scrapped. The collapse of the 2.5 trillion won deal, which involved HDC buying South Korean conglomerate Kumho Industry's 31% controlling equity in Asiana, left the airline with an uncertain future. The Korean Development Bank and state-run industry funds have tipped in trillions of won to keep the airline group going amid depressed market conditions.
