Korean Air saw its 2023 operating profit fall 45% year on year to W1.6 trillion ($1.2 billion) on cargo weakness, as travel demand helped push revenue to a record high.
Reporting “tentative” full-year results, Korean air says 2023 revenue came in at W14.6 trillion, as net profit halved to W917 billion.
“Korean Air’s cargo business performed strongly during the pandemic due to global supply chain issues, ocean freight bottlenecks, and limited aircraft belly cargo capacity,” says the carrier.
“However, with the recovery of the air cargo industry post pandemic, cargo operating profit decreased year on year.”
Two factors in particular hurt cargo revenues: a return to normalcy in ocean freight and the return of bellyhold space as passenger traffic recovered.
A weaker cargo market was offset by strong travel demand, which helped revenue at Korean’s passenger business exceed that recorded in in pre-pandemic 2019. Korean notes that the strong revenue result occured even though capacity was only 80% of pre-pandemic levels.
“Korean Air anticipates passenger demand and capacity to fully recover in [the first quarter],” says the airline.
“Long-haul demand is expected to remain robust, and the airline forecasts the recovery of tourism demand during the peak winter season to boost revenue. Korean Air will maximize revenue by resuming routes and increasing capacity to popular tourist destinations in Southeast Asia and Japan.”
Korean warns that a weak global economy will continue to cloud the cargo business, citing uncertain demand for products such as semiconductors, cars, and displays.
“The airline aims to respond flexibly to the ongoing robust demand in e-commerce that has carried over from the end of last year and will respond to supply chain uncertainties arising from global geopolitical risks,” adds Korean.
In the fourth quarter of 2023, Korean’s operating profit fell 64.7% to W184 billion, as revenue rose 10.3% to W3.9 trillion.
