3 May 2011, Seoul, Korea – With 133 aircraft on its fleet, South Korea’s flag carrier, Korean Air will be ordering five Airbus 330s and two Boeing 777-300ERs worth US$1.6 billion. The airline will expect delivery of these new aircraft between 2013 and 2015.
This latest purchase agreement with Airbus increases the total number of A330s ordered by Korean Air to 30 aircraft, of which 23 have already been delivered, while Boeing 777s ordered increases to 13 aircraft of which 28 are in use.
Korean Air currently operates almost 400 passenger flights per day to 112 cities in 39 countries.
In 2010, Business Traveler named Korean Air the best Asian airline for the fourth consecutive year and best transpacific business class for the fifth straight year, while Global Traveler awarded the airline with best business class seat design and best airport staff/gate agent. The carrier won the 2010 global travel catering distinction award by Pax International magazine while World Traveler magazine rated it as having the world’s best inflight service. Travel & Leisure magazine readers say it is one of the world’s top 10 international airlines and readers of Conde Nast Traveler magazine voted Korean Air one of the world’s top ten global airlines.
Today, the airline also posted an operating revenue of 2,719 billion KRW, a year-on-year increase of 6.3%, and an operating profit of 145 billion KRW. Income before tax recorded a year-on-year increase of 16.3%, reaching 258 billion KRW during the reporting period. Net income amounted to 190 billion KRW, up 13.9% thanks to foreign currency translation gains. Korean Air’s international passenger and cargo businesses remained its major revenue contributors in the first quarter, accounting for 53.7% and 31.4% of the operating revenue, respectively.
The airline posted overall respective growths of 2.0% and 3.0% with regard to international passenger capacity and traffic compared to the corresponding period of the previous year, reaching 18,752 million ASK and 14,575 million RPK, respectively, thanks primarily to traffic growth in international routes, including China, Japan, SE Asia and the Americas. Moreover, the airline saw a surge of 6% in Korean-inbound traffic and transit passenger volume during the reporting period, which also facilitated the overall growth of its international passenger business.
Demand for world cargo progressed steadily as reflected in the performance of Korean Air’s cargo business in the first quarter of 2011. Capacity increased by 0.5 % to 3,017 million AFTK while traffic dropped slightly by 1.6% to 2,277 million FTK. SE Asian and Japanese cargo routes exceeded their performances year-on-year. Meanwhile, transit cargo traffic recorded significant growth, particularly in outbound routes to Europe (up 17%), SE Asia (up 4%) and Japan (up 3%).
Korean Air expects 2011 to be another challenging yet thriving year for the aviation industry. International air traffic demand, especially from the SE Asian region, is expected to see a further boost. Favorable factors in Korea, such as a stable US dollar exchange rate, positive US visa waiver program influences, and stronger passenger traffic demand from China and countries in SE Asia, should also benefit the airline in the year to come.
For the passenger business, the airline is devoted to making every effort in optimizing its business. Service to St. Petersburg, one of the most favorable destinations in the Northern hemisphere, resumed on April 26. New routes, including Huangshan and Cheongju/Hangzhou in China and Irkutsk in Russia, and more frequent schedules are planned for 2011 in order to meet the increasing demand for international traffic. In view of the recent earthquake and tsunami in Japan occurring in March 2011, the capacities for Japanese routes will be managed in a flexible manner and in accordance with the overall traffic recovery trend of the remaining part of the year.
World cargo business is expected to grow further in the coming months, mainly because of the increasing transport of emergency relief materials to Japan from all over the world. Extra cargo traffic is expected to be made as alternative parts supplier outside Japan may replace Japanese manufacturers to fill the gaps in inventory storage. Traffic of IT products is expected to slow down, while the strong flow of auto parts and machinery is expected to continue during the current year.
Korean Air will continue its efforts to strengthen its premium class service, and will introduce an upgraded fleet with enhanced fuel and environmental efficiency to enhance its travelling experience. On April 16, the airline successfully completed its 6-year extensive refurbishment plan. The entire fleet is now installed with next-generation premium seats fitted with the latest AVOD system for all classes, as well as upgraded galley facilities. In terms of fleet size, 14 aircraft for passengers and 2 aircraft for cargo are scheduled to be delivered to the fleet in 2011 (131 in operation as of March 31, 2011). Delivery of the first A380 is scheduled for the second quarter of this year. The airline will initially operate the A380 on flights from Seoul to Tokyo, Hong Kong and Bangkok, followed later in the year by transpacific services to New York and Los Angeles. The airline has also announced orders to add Airbus 380s and Boeing 787s to its fleet.
Korean Air’s innovation continues to span across its offerings so that it can hold true to its aim of providing the best in-flight experience to its customers. The airline’s latest insightful examples have included the offering of new high-end amenity kits to first class passengers and health-conscious meals to all classes. By holding its long-standing commitment to achieving “Excellence in Flight”, the airline will continue to improve and solidify its standing as a leading global carrier worldwide.
* Exchange rate on March 31, 2011: 1 US Dollar = [1107.20] KRW
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