Korean Air posts record quarterly sales in Q3 on strong cargo demand

(Korean Air)

South Korea’s flag carrier Korean Air Lines Co. reported strong results for the third quarter of 2024 on the back of strong cargo business.

Korean Air announced in a regulatory filing on Wednesday that its third-quarter revenue stood at a quarterly record of 4.24 trillion won ($3.03 billion), up 10 percent from the same period a year ago. Its operating profit came to 618.6 billion won, up 19 percent.

Korean Air’s strong performance was driven by increased cargo demand from the growth of Chinese e-commerce platforms such as AliExpress, Temu, and Shein.

Its cargo revenue rose by 22 percent on year to 1.12 trillion won during the July-September period, a traditionally low season for air cargo.

Passenger revenue gained by 2 percent to 2.62 trillion won during the same period.

However, net profit dropped by 35 percent to 276.6 billion won due to temporary factors such as the strong U.S. dollar and U.S. interest rate hikes.

“We plan to diversify our revenue sources in the fourth quarter by increasing capacity on Southeast Asian routes, where winter travel demand is expected to peak,” said a company official. “We also plan to expand gift card redemption options and operating paid seats.”

Korean Air has been actively seeking new business opportunities beyond its core passenger and cargo sectors, particularly in defense and aerospace.

It signed a memorandum of understanding (MOU) with Air University at its air aviation technology research institute in Yuseong District, Daejeon, on Tuesday, to collaborate on defense policy and technology, focusing on research into manned-unmanned hybrid combat systems.

Since 2022, Korean Air has been working with the Agency for Defense Development on developing collaborative combat aircraft, an AI-driven unmanned aircraft designed to operate alongside manned fighters, which is set to be unveiled in 2025.

Korean Air is also preparing to enhance the special operations capabilities of the UH-60 Black Hawk, the primary helicopter of the Korean military.

The airline’s merger with Asiana Airlines Inc., which has been ongoing for over four years, is now in its final stages.

According to sources from the airline industry, the European Commission (EC) is expected to grant its final approval this month.

When it comes to the U.S., the merger will be deemed approved unless the Department of Justice files a lawsuit, so the EC’s final approval is anticipated to conclude the global regulatory process.

Korean Air is awaiting the EC’s final decision after fulfilling its conditions for approval, including transferring four European routes (Paris, Rome, Frankfurt, and Barcelona) and selling Asiana Airlines‘ cargo division.

Korean low-cost carrier T’way Air Co. will take over the four European routes, and Korean cargo airline Air Incheon Co. will acquire the cargo division.

Once the EU and U.S. approvals are finalized, Korean Air plans to participate in Asiana Airlines’ third-party rights issue of 1.5 trillion won ($1.07 billion) by December 20, becoming its largest shareholder.

If the acquisition proceeds smoothly, the airline is set to become a top 10 global mega carrier. It will also end the two-power system in the Korean airline industry that has continued for 36 years since the founding of Asiana Airlines in 1988.

Post-merger, Korean Air plans to operate Asiana Airlines as a subsidiary for two years, focusing on integration such as merging mileage programs, integrating organizational cultures, and gradually changing aircraft liveries.

Full brand integration is expected to take place in two years.

“The U.S. is closely following the EC’s progress, and we expect the U.S. Department of Justice to grant its approval after the EC’s final review,” said a Korean Air official. “In this regard, we expect to close the acquisition of Asiana Airlines’ new shares by December 20 as planned.”