The top airliner in South Korea predicted its July-September profit would set a record, after reporting a forecast-beating quarterly profit powered by reduced fuel costs and higher cargo demand.
"From next year, we will aggressively expand international routes by raising their frequency," said Walter Cho, a senior vice president of Korean Air, after a conference with analysts. "Our supply will soar from next year, too."
Cho, 34 and the son of the chairman of Korean Air's parent group, named Singapore Airlines its biggest rival and said it would challenge the world's second-most valuable carrier by market value by launching new routes to the Maldives and boosting the frequency of flights to Dubai and Hawaii.
Operating profit for the first quarter at Korean Air, the world's largest cargo carrier among commercial airlines, rose to 220.2 billion won ($197.5 million) from the year-earlier's 6.6 billion won and 154 billion won three months ago.
The results, the highest profit since the third quarter of 2007, topped a mean forecast of 176 billion won from analysts polled by Thomson Reuters I/B/E/S, indicating the global aviation industry was recovering fast from the the doldrums.
Korean Air is expected to top its 2010 operating profit target of 800 billion won, chalking up an estimated 1 trillion won, said chief financial officer Lee Sang-kyoon in its first earnings conference with analysts since 2006.
The South Korean airline will expand its fleet by 56 planes by 2016, including a total of six airliners from Boeing Co and EADS' Airbus this year and 10 planes in 2011.
The expansion is expected to cost a total of $10 billion.
The company has already secured $700 million, most in loans, to finance its 2010 plane supply, said Lee.
The global aviation industry is forecast to grow around 3 percent in 2010, Korean Air said citing research institutes, while South Korea's international traffic market is seen jumping 9.7 percent, according to the country's transportation ministry.
Korean Air is upbeat about its 2010 outlook thanks to strong product shipments and with the firmer won reviving outbound passenger travel. South Korea maintained double-digit export growth in the first three months of this year.
"Company-wide, the third-quarter will be a record. Passenger traffic will outweigh the seasonal slowdown in cargo demand in the quarter," Cho told a conference with analysts. (Reuters)
