News
Korean Air posts $486 million annual loss
February 17th 2017
South Korea's largest carrier, SkyTeam member Korean Air, has posted a full year 2016 net loss of 556.8 billion won (US$485.9 million), a marginal improvement over a net loss of 562.97 billion won in 2015. Read More »
Sales increased 1.6% year-on-year, to 11.73 trillion won, and operating profit grew 26.9%, to 1.12 trillion won. At the same time, the airline booked massive foreign exchange losses, including an 860 billion won write-off in the fourth quarter and losses from its bankrupt affiliate, Hanjin Shipping Co., and the 10-day pilot strike in December.
"Despite a rise in sales and improved operating profit based on reduced costs, the company posted a net loss due to losses from foreign exchange and Hanjin Shipping-related losses," Korean Air said. Korean Air is the most indebted airline among Asia's full-service carriers with a debt-to-equity ratio exceeding 1,000%. To ease the burden, the airline will issue 458 billion won of new shares to secure working capital.
The airline, which has 160 planes, will take delivery of 16 aircraft in 2017, five B787-9s (February, April, July, September and December), three B747-8s (April, May, July), seven CS300s (August, September, October, November x 2, December x 2c) and a B777F in September.
South Korea’s second largest carrier, Asiana Airlines, mended its bottom line in 2016 when it reversed a a 139 billion won (US$122 million) 2015 loss to a 54 billion won profit last year, despite incurring equally as damaging foreign exchange losses as its rival.
Asiana said the improved result was the result of terminating several loss-making routes, including to Denpasar and Yangon, and the launch of its low-cost carrier (LCC), Air Seoul. The LCC is earmarked to take over low-yielding routes from the parent, including numerous flights to Japan.
