South Korea: Soaring fuel costs force airlines to shift to emergency mode

Korean Air, Asiana Airlines and low-cost carriers have shifted to emergency mode to attract as many passengers as possible to cope with soaring fuel costs and other operating expense increases, according to industry officials, Tuesday. The number of passengers has been on a rapid recovery track this year, but surging fuel costs are casting dark clouds over the earnings outlook of the nation's largest carrier. According to data from market tracker, FnGuide, Korean Air is forecast to continue reporting a double-digit decline in its operating profit in Q3 of this year, because airlines operating long-haul international flights are more vulnerable to the price volatility of aviation fuel. Korean Air reported an operating profit of 468b won ($365.27m) in Q2, down 36% from a year earlier, due to rising fixed costs triggered by a faster-than-expected recovery in passenger loads following protracted COVID-19 pandemic lockdowns. Reflecting growing demand for air travel, Korean Air's sales increased 6% during the same period. But it appears too early to expect a major earnings turnaround soon, as rising fuel costs will likely keep pulling down Korean Air's revenue even in the latter half of this year, according to data from the market tracker. FnGuide forecast the carrier's Q3 operating profit to drop 24.8% year-on-year. Officials at other airlines also said they intend to minimize possible losses by generating more revenues from increased passenger traffic. "We will focus on reviving profitability by attracting more passengers for our cash-cow flight routes to China," an official from Asiana Airlines said.<br/>