Press Release
Korean Air operating performance remains strong in 2007
Plans to expand premium service further in 2008
SEOUL, Korea (February 1, 2008) – Korean Air, the flagship carrier of South Korea, today announced its 2007 fourth quarter results for the three months ended December 31, 2007. Operating revenue increased by 8.9% to 2,302 billion Korean won as compared to 2,115 billion Korean won for the same period last year. Korean Air concluded 2007 with a full year operating revenue of 8,812 billion won and an operating income of 637 billion won, representing an increase of 9.1% and 28.0% respectively, mainly driven by the growth in international passenger and cargo revenue.
The strong operating performance was offset by a sharp increase in fuel expenses and the decrease in foreign exchange gains. As a result, the net income for 2007 decreased to 11 billion won.
Jonghee Lee, President and COO of Korean Air, said “The soaring fuel price has imposed a great challenge for airlines around the world and in Korea, we were also affected by a disadvantageous exchange rate. We countered these unfavorable factors by focusing on building our premium services and selective expansion in high-potential markets. We have also implemented efficiency enhancement measures across the board. While we are fully aware of the challenges ahead, we are very confident that Korean Air can maintain a strong operating performance in 2008.”
International passenger and cargo remained the major revenue contributors for Korean Air in 2007, accounting for 52.6% and 28.7% of the total operating revenue respectively. Korean Air differentiated itself from its competitors by focusing on premium passengers on its international routes, boosting the yield by 8.0% for 2007. Domestic passenger yield improved by 5.4% despite the impact of seasonality. On the cargo front, the effect of route restructuring and optimization was reflected in the yield increase of 11.7% for the fourth quarter of 2007.
In 2008, Korean Air will continue to focus on profitability enhancement by increasing sales in the premium passenger sector, expanding international markets and developing new routes such as Sao Paulo and Munich.
In terms of the cargo business, Korean Air will sustain revenue and yield growth by developing new markets in South America and Africa, offering competitive services to its customers and optimizing its cargo network.
To capitalize on the fast growing China market, Korean Air will establish a local cargo hub in Tianjin, China, by setting up a joint venture with Sinotrans Air Transportation Development to establish a cargo terminal at the Tianjin Binhai International Airport. Grand Star, a cargo airline joint venture with Sinotrans, will commence operations in early 2008.
With continued efforts in fleet and network expansion, Korean Air now flies to 115 destinations in 37 countries with its strong fleet of 126 aircraft.
## Exchange rate on December 31, 2007: 1 USD = 938.2 KRW