Korean LCCs report widening loss in Q1, Asiana reduces losses on cargo demand

South Korean low-cost carriers reported extended losses in the first quarter amid a slump in air travel because of the pandemic while full-service airliner Asiana Airlines Inc. managed to offset losses from reduced passenger flights by increasing cargo volumes.

The country’s three Kospi-listed LCCs Jeju Air, Jin Air and T’way Air saw their first–quarter operating profits down heavily from a year earlier.

Jin Air delivered an operating loss of 60.1 billion won ($53.2 million), much widened from 31.3 billion won from a year ago. Net loss also increased to 72.1 billion won from 45.8 billion won, while sales slid 69.5 percent on year to total 43.9 billion won.

T’way Air’s operating loss more than doubled to 45.4 billion won with sales down 76.4 percent to 35.2 billion won.

Jeju Air posted an operating loss of 87.3 billion won, up 32.8 percent on year, with sales down 81.8 percent to 41.8 billion won.

Low-cost carriers largely dependent on passenger flights are facing a negative outlook despite rising cargo shipping rates amid a heated race for domestic routes.

With LCC newcomers like Aero-K that went on its maiden flight on a domestic route last month and Air Premia readying its first takeoff, fierce competition in the saturated market will likely continue for a while.

Last month, Korean airliners supplied 3.65 million seats on domestic routes with 19,000 flight services larger than the previous year.

Unlike LCCs with less focus on cargo business, Asiana Airlines succeeded in slashing losses in the first quarter with a fleet of 12 cargo planes. Its operating loss plunged to 11.2 billion won on revenue of 783.4 billion won in the January-March period.

On the back of rising cargo shipping rates, the airliner is expected to swing back to a profit in the second quarter, according to experts. Asiana Airlines is also expanding passenger services with international flights to nowhere in which passengers can enjoy aerial view and duty-free shopping.

Korean Air Lines Co. is the only airline company that reported an operating profit of 124.5 billion won in the first three months, reversing from a loss against the previous year. Sales were down 24 percent on year, but revenue from its freight business more than doubled.

Korean Air services the entire cargo fleet of 23 aircrafts and even is expanding cargo deliveries by transforming passenger flights into cargo carriers to meet the growing demand. Its first-quarter cargo flight services rose 7 percent on year to 143 times a week.

On Tuesday, Jeju Air shares closed 4.38 percent lower at 24,000 won in Seoul, Jin Air 15.94 percent down at 21,350 won, and T’way Air 7.59 percent down at 2,920 won. Korean Air Lines shares were off 1.64 percent to end at 30,000 won, and Asiana Airlines 0.64 percent down at 15,550 won.

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