Korean Air, Asiana Airlines face decline in Q3 profits

Korean Air and Asiana Airlines reported profit declines in Q3 due to challenges in the cargo sector.

Korean Air and Asiana Airlines planes are parked at Incheon International Airport on Nov. 2. [YONHAP]

Korean Air and Asiana Airlines, the country's two largest airlines, reported a decline in profits in the third quarter due to challenges in the cargo sector.

Korean Air on Tuesday reported a 38 percent reduction in operating profit, reaching 520.3 billion won ($391.8 million) in the third quarter.

Despite a 5 percent boost in third-quarter revenue to 3.86 trillion won, net profit dwindled by 2 percent to 424.5 billion won.

“Operating profit declined due to escalating costs in fuel and personnel, stemming from an upswing in the supply of passenger planes,” Korean Air explained.

On the revenue front, Korean Air saw a 76 percent surge in passenger earnings during the third quarter, totaling 2.56 trillion won. This surge was fueled by robust demand during the summer holidays and Chuseok, the airline said. Conversely, the cargo segment faced a 51 percent drop in revenue to 915.3 billion won due to the prolonged offseason for air cargo.

Asiana Airlines, on the other hand, disclosed Tuesday a 44.8 percent year-on-year decline in operating profit, amounting to 126.7 billion won for the third quarter.

Despite a 13.1 percent rise in revenue to 1.72 trillion won, the airline grappled with a net loss of 312 billion won for the quarter.

“Heightened operating costs resulting from an expansion in flight operations and a decline in cargo business profitability had an impact,” Asiana Airlines said.

Its third-quarter passenger business showed resilience, with revenue soaring by 63 percent to 1.21 trillion won. The cargo business revenue dropped by 47.7 percent, totaling 355.7 billion won compared to the previous year. This was attributed to heightened market competition, driven by an increase in belly cargo due to the rise in international passenger flights, as well as decreased demand amid the ongoing global economic downturn.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]