Summary
- Korean Air’s 2023 revenue reached a record high at $11.3 billion, exceeding pre-COVID levels.
- Despite increased staff wages, the airline still achieved a 10% operating profit margin, surpassing industry standards.
- Korean Air’s cargo market performance remained strong in 2023, with revenue up by 58%, although operating profit decreased compared to 2022.
Last week, Korean Air released its fourth quarter and 2023 full-year financial estimates, which showed that in 2023, the airline earned record high revenue of US$11.3 billion with an operating profit of $1.23 billion, while in the quarter that ended December 31, 2023 (4Q2023) Korean Air also posted record quarterly revenue of $3.09 billion.
Revenues are ahead of pre-COVID levels
With travel restrictions in Northeast Asia a thing of the past, Korean Air has quickly returned seat capacity and is gearing up for a busy start to 2024. Compared to pre-pandemic 2019, the airline increased passenger revenue by 16% and load factor by 1.9 percentage points, but available seat kilometers are 20% and revenue passenger kilometers are 18% below the pre-pandemic levels.
Photo: Bjoern Wylezich | Shutterstock
Annual passenger business revenue increased compared to 2019, driven by strong travel demand and higher demand for premium class travel, despite network capacity only recovering to 80% of pre-pandemic levels. In 2023, Korean Air (Korean) posted revenue of $11.3 billion, operating profit of $1.23 billion and net profit of $711 million, compared to $10.4 billion, $2.23 billion and $1.38 billion, respectively, in 2022.
Photo: Korean Air
The 2023 operating profit was higher than in 2019, and the 10% operating profit margin earned last year was well above the industry average. The fourth quarter operating profit of $142.4 was 65% down on the same period in 2023, which Korean said was due to increased staff wages, including incentives for achieving annual performance and safety performance targets.
Cargo has held ground in 2023
Korean Air has been a consistently strong performer in cargo markets, and in 2023, all of its cargo metrics were ahead of 2019, including revenue, which was up by 58%. The carrier attributed the excellent result to global supply chain issues, ocean freight bottlenecks and limited aircraft belly cargo capacity.
Photo: Markus Mainka | Shutterstock
However, Korean cautions that with the recovery of the air cargo industry post-pandemic, cargo operating profit decreased compared to 2022. In the first quarter of 2024, air cargo demand for traditional items, such as semiconductors, automobiles and displays, remains uncertain due to the weakness of the world’s economy, although it does see robust demand in the e-commerce sector.
Regarding the passenger market in 2024, the airline anticipates that demand and capacity will fully recover by the end of March. Korean Air said that long-haul demand is expected to remain robust, and it forecasts that the recovery of tourism demand during the peak winter season will boost revenue. The carrier also plans to maximize its revenue by resuming routes and increasing capacity to popular tourist destinations in Japan and Southeast Asia, while Korean Air is one of the fastest-growing airlines in Australia, particularly on the Seoul to Sydney and Brisbane routes.
At the end of 2023, Korean Air had a fleet of 159 aircraft, compared to 155 at the end of 2022. During 2023, three Airbus A330s, two Boeing 777s and one Boeing 737 were removed, and eight Airbus A321 neos and two Boeing 787-9s were added. On December 31, 2023, the passenger fleet included ten Airbus A380s, 27 A330s, nine A321neos and 10 A220s (CS300s). The Boeing aircraft included nine 747-8Is, 37 777s, 12 787-9s, 17 737-800/900s and five 737 MAX 8s. The cargo fleet is an all-boeing affair with four 747Fs, seven 747-8Fs and 12 777Fs.
