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Korean Air blames US$144 million quarterly net loss on MERS outbreak

KOREAN AIR posted a KRW169.2 billion (US$144 million) second quarter net loss compared with a KRW361.8 billion quarterly profit the year before, which were drawn on revenues of KRW2.79 trillion, which fell 3.8 per cent year on year.

Korean Air's cargo second quarter traffic was flat despite a 2.9 per cent capacity increase, causing load factor to drop 2.1 points to 77.6 per cent. Yield fell 16.4 per cent.

Poor passenger results were blamed on an outbreak of Middle East Respiratory Syndrome (MERS) in South Korea in May that triggered large-scale trip cancellations by Chinese and Japanese tourists.

The Korean flag carrier said the bottom line was also hurt by a weaker Korean currency inflating the value of its foreign debt and interest payments.

The country's two biggest airlines - Korean Air and Asiana - suffered a deep decline in inbound passenger traffic, forcing them to cut back flight schedules.

Korea's MERS outbreak was the largest outside Saudi Arabia, with 186 infections and 36 deaths, prompting thousands of tourists to cancel visits to the country. No new MERS cases have been reported since early July.

Korean Air said it has since resumed normal operations on all routes to China and Japan.

More than two-fifths of South Korea-bound travellers last year were Chinese, and their numbers have swelled at a compounded annual growth rate of 40 per cent over the past three years, according to Credit Suisse.