Korean Air
Korean Air hurt by tourism slowdown
SEOUL -- Korean Air Co. posted a wider net loss in the first quarter compared with a year earlier due to hefty foreign-exchange losses and low demand.
The airline, South Korea's largest carrier by sales, reported a net loss of 526.32 billion won ($413.4 million) for the first quarter ended March 31, wider than a year-earlier net loss of 325.45 billion won. Operating profit fell 66% year-to-year to 6.6 billion won from 19.6 billion won, while sales slipped to 2.264 trillion won from 2.265 trillion won.
Losses on foreign-exchange transactions soared to 167.25 billion won from 15.69 billion won a year earlier, as the dollar rose 48% against the won compared with the year-earlier quarter, the company said in a statement.
"The won's depreciation [against the dollar] has limited much of the outbound travel demand," said spokeswoman Lee Ji-hye.
Outbound passenger traffic on U.S. routes rose on South Korea's inclusion in the U.S. visa-waiver program, and inbound traffic from Japan increased due to the stronger Japanese yen, but those factors weren't enough to offset a slump in outbound tourism travel, Korean Air said.
Outbound traffic in technology product shipping has turned around since March, though recovery signs in overall cargo traffic have yet to come, the airline said.
Analysts expect Korean Air's bottom line will begin to improve this quarter if the dollar-won exchange rate stabilizes and outbound travel demand perks up.
"Korean Air is likely to shift to an operating profit in the second quarter but a sizable [quarterly] operating profit will be likely only in 2010," Han Byung-wha at Hyundai Securities said.
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