Cargo boom drives record annual profit for Korean Air
Bucking the COVID-19 gloom, Korean Air has reported record annual and quarterly profits, driven by its cargo operations.
Korean Air said its cargo business had a record fourth quarter, achieving KRW 2.1807 trillion in revenues, and that it had been able to react proactively to global supply chain disruptions caused by the spread of the Omicron variant of COVID-19.
The lack of available cargo capacity in the market amidst high demand means prices for transporting goods via cargo have gone up, boosting profits. The International Air Transport Association (IATA) said on January 25, 2022 that in December 2021, cargo rates were almost 150% above 2019 levels. Globally, demand for air cargo was up 7% in 2021 compared with pre-COVID-19 levels, IATA said.
“Peak demand during the year-end holiday season and constraints in passenger jet belly space due to reduced operations have led to a noticeable increase in fares,” Korean Air explained in its statement on January 27, 2022.
The South Korean flag carrier noted that Omicron may further delay global supply chains from getting back to normal.
“The cargo business will keep these uncertainties in mind as it strengthens its operational capabilities to render stable and dependable air cargo capacity, and actively responds to market changes by operating charter and cargo-only passenger flights,” it said.
The airline reported KRW 8.7534 trillion ($7.4 billion) in overall revenue for 2021, up 18% year on year, while operating profit jumped six-fold to KRW 1.4644 trillion ($1.2 billion).
Korean Air said its previous record annual profit was KRW 1.1589 trillion, achieved in 2010.
On the passenger side of its business, Korean Air said the extension to quarantine-free travel to destinations such as Guam, Singapore and Hawaii from Korea had led to a rise in passenger traffic.
“Korean Air expects the speed of passenger demand recovery to be determined by the COVID-19 variant situation and border regulations. The airline plans to continue to flexibly operate routes to respond to market trends,” it commented.
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