Following the lead of several other airlines, Korean Air has also reported losses for the first quarter of this year. The flag carrier of South Korea’s revenue decreased to ₩2.35 trillion ($1.9 billion), which is ₩689 billion ($559 million) less than the first quarter of 2019. Altogether, the consequences of the global health crisis have caused the airline to record a ₩57 billion ($46 million) loss.
According to a press release sent to Simple Flying, the company’s net loss also increased year-on-year due to ₩376 billion ($305 million) in foreign currency translation losses. A rise in foreign exchange rates caused this issue.
The losses could have been much worse, but the firm reduced its operating costs by 14 percent compared with this time last year. Costs such as fuel consumption and payroll were reduced substantially amid all the flight suspensions and aircraft groundings.
Korean Air president Keehong Woo spoke of the impact that the pandemic has had on his business. He also took a moment to highlight the efforts that his partners and employees have made during these tough times.
“I deeply appreciate the dedication and sacrifice of our executives and employees; executives have forgone up to 50% of their salaries and 70% of employees are taking leave. The company was able to minimize losses with their support despite many challenges presented by the unprecedented COVID-19 crisis,” Woo said, as per the press release.
“We are also grateful to the government of Korea, the Korea Development Bank (KDB) and the Export-Import Bank of Korea for their support in these dire times. We will continue our self-rescue efforts both operationally and financially, while prioritizing the health and safety of our employees and customers at all times.”
Could be worse
Even though these losses are significant, the damage is not as devastating compared to the situation of several other operators across the globe. American Airlines recorded a net loss of $2.2 billion for Q1 2019. Meanwhile, United Airlines posted a $1.7 billion net loss.
South Korea was one of the nations to be impacted by the virus outbreak early on. However, it looks like Korean Air’s efforts managed to save some cash to prevent it from being in the same state as its counterparts.
Moreover, when it comes to net loss, this period’s result is a little better compared to 2019. According to Yonhap News Agency, the airline recorded a net loss of ₩61.8 billion ($50 million) for the first quarter of last year. The principal cause of this result was also a weakened national currency.
Altogether, it was expected that Korean Air’s results wouldn’t be positive due to the global aviation crisis. However, the finances could have been much worse if it did not make some sacrifices.
Nonetheless, the company is facing tough challenges as it seeks additional funding to help weather the storm. Hopefully, as airlines and authorities find a balance on how to deal with the pandemic, healthier numbers are reported this time next year.
Simple Flying reached out to Korean Air for comment on the losses. We will update the article with any further announcements.
What are your thoughts on Korean Air’s results? Do you see these numbers continuing through the next quarter? Let us know what you think in the comment section.