Operating Income Drops 27%
Korean Air achieved the highest-ever sales since its foundation last year but its profitability deteriorated due to rising oil prices.
The company announced on Jan. 29 that it posted 12.65 trillion won in sales and 692.4 billion won in operating income based on non-consolidated financial statements last year. Its sales swelled 7.2 percent from the previous year (11.80 trillion won), the highest-ever sales since the company's foundation.
However, its operating profit fell 27.6 percent from 956.2 billion won in the previous year. The company also posted 80.3 billion won in net loss by switching to a deficit.
By business segments, its sales in the passenger business grew 10 percent. The sales growth was attributable to an increase in domestic and overseas travel demand and the launch of a joint venture for Pacific routes with Delta Air Lines. The company also cited increasing customer convenience following the relocation of Incheon International Airport Terminal 2 as one of the reasons.
In the freight business, its sales grew 7 percent despite the global economic downturn stemming from the U.S.-China trade dispute. The company diversified its air transportation business and employed profitability-oriented sales strategies based on flexible supply control, Korean Air said.
Its debt ratio rose to 699 percent. Korean Air explained that the rise in the debt ratio was due to a decrease in non-operating capital such as a foreign exchange translation loss of 360 billion won due to the strengthening of the dollar and a 180 billion won of foreign bonds due to the conversion of foreign bonds.
As for its net loss, Korean Air got into the red due to foreign currency translation loss among others as a result of a rise in the evaluation exchange rate at the end of the year. Net interest expense of 454.8 billion won and foreign currency transaction loss of 363.6 billion won incurred Korean Air’s net loss.