KOREA: Korean Air posts surprise Q2 loss

Korean Air posted a surprise quarterly net loss last month after it booked US$300 million in fi nes for conspiring to fi x fl ight prices, and faces earnings uncertainty over follow-up civil action,analysts say. “The US price fixing probe has been an uncertainty factor since the investigation started in February 2006, but still the […]


Korean Air posted a surprise quarterly net loss last month after it booked US$300 million in fi nes for conspiring to fi x fl ight prices, and faces earnings uncertainty over follow-up civil action,analysts say.

“The US price fixing probe has been an uncertainty factor since the investigation started in February 2006, but still the size of the fi ne took me off guard. It’s huge,” Reuters quoted Baik Ji-ae, an analyst at Tong Yang Investment Securities, as saying.

“Basically, Korean Air just settled criminal charges and it will now have to brace for civil law suits like class action suits. Previous earnings estimates for this year look meaningless now.”

Korean Air, the world’s top air cargo carrier, swung to a KRW214.4 billion won (US$231.8 million) net loss in the second quarter ended June 30, from a KRW14.9 billion profi t a year earlier.

Korean Air said its operating profi t rose 9 percent to KRW75.4 billion won as international passenger traffi c grew 10 percent and jet fuel costs dropped about 6 percent, but the rise also fell short of expectations. Helping cut fuel costs was a stronger won, which rose 2.7 percent against the dollar in the second quarter from a year ago.