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(LEAD) Korean Air Q2 net losses widen on FX losses

All News 17:45 August 14, 2019

(ATTN: ADDS details in paras 5-7, 9)
By Choi Kyong-ae

SEOUL, Aug. 14 (Yonhap) -- Korean Air Lines Co., South Korea's national flag carrier, said Wednesday its second-quarter net losses widened from a year earlier due to hefty foreign-exchange losses.

For the three months that ended in June, net losses widened to 396.3 billion won (US$327 million) from 304.7 billion won a year earlier, Korean Air said in a statement.

"The won's weakness (against the dollar) and lower demand in cargo deliveries amid a U.S.-China trade war cut into the quarterly bottom line," a company spokesman said over the phone.

The won fell to an average of 1,165.91 against the greenback in the second quarter, from 1,078.57 a year ago, according to the Bank of Korea. A weak won drives up not only fuel purchasing costs but also the value of dollar-denominated debts when converted into the local currency.

Looking ahead, the country's biggest full-service carrier worried that the ongoing anti-Japan campaign will dampen travel demand to the neighboring country for the rest of the year and could have an impact on its annual earnings results.

In response to a decline in travel demand following Japan's exclusion of South Korea from its list of trusted trading partners early this month, Korean Air said it plans to suspend the Busan-Sapporo route from Sept. 3 and replace existing planes on Japanese routes with smaller ones.

"To offset lower demand to the neighboring nation, the company will increase flights on non-Japan routes for the rest of the year," the spokesman said.

The company shifted an operating loss of 98.6 billion won in the second quarter from an operating profit of 66.7 billion won a year earlier. Sales rose 0.5 percent to 3.12 trillion won from 3.11 trillion won during the same period.

From January to June, net losses also deepened to 458.1 billion won from 314.7 billion won in the same period of last year. Operating profit nose-dived 82 percent to 41.9 billion won from 233 billion won. Sales rose 0.8 percent to 6.26 trillion won from 6.21 trillion won.

A Korean Air B787-9 passenger jet (Yonhap)


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