By Joyce Lee
South Korea's largest airline Korean Air on Friday posted a consolidated operating loss of 82.8 billion won ($67.3 million) for the January-March quarter, swinging into the red as the aviation industry reels from the coronavirus pandemic.
The provisional loss was relatively milder than expected, however, beating an average estimate of 137.6 billion won operating loss from nine analysts based on Refinitiv data, due to a reduction in operating costs such as fuel and payroll by 14% than the same period last year, Korean Air said.
"Executives have forgone up to 50% of their salaries and 70% of employees are taking leave. The company was able to minimise losses with their support despite many challenges presented by the unprecedented COVID-19 crisis," Korean Air President Woo Kee-hong said in a statement.
The flagship carrier and partner of Delta Air said its passenger services recorded a 29.5% decrease in revenue passenger kilometres from the year-earlier period due to the fall in demand across all routes.
Cargo sales, though, recorded a 3.1% increase in freight ton kilometres from a year earlier - even though cargo capacity decreased due to the reduction of passenger flights - because of increased freighters operations, improved capacity utilisation and the use of passenger jets as freighters, it said.
Korean Air said it expected further losses due to the COVID-19 pandemic in the second quarter. But the cargo market is also expected to experience a further supply shortage due to the reduction and suspension of passenger flights worldwide, the carrier said, enabling it to continue profitable cargo operations.
On Wednesday, Korean Air became the latest carrier to raise funds as it announced plans to sell around 1 trillion won ($820 million) in new shares in its biggest rights issue in 20 years, as the industry sees strained finances from grounded fleets.
The country's second-largest airline Asiana Airlines Inc also reported a provisional consolidated operating loss of 292 billion won for January-March on Friday.
It said its international schedule fell as low as 8% of previous plans since February, when travel restrictions for South Korean nationals were imposed by various countries due to COVID-19.
Overseas peers have also announced losses, with Singapore Airlines Ltd reporting its first-ever annual loss and Cathay Pacific Airways Ltd announcing an unaudited loss of HK$4.5 billion ($580.53 million) at its full-service airlines earlier this week.
($1 = 1,231.2900 won)
(Reporting by Joyce Lee; Editing by Alex Richardson, Tom Hogue and Raissa Kasolowsky)