25-08-2022, 09:39 AM
One airline industry insider said, "Earnings were strong due to booming cargo business and passenger traffic is recovering, but the currency factor is a headache."
Budget carriers are in even bigger trouble. Korean Air and Asiana were able to make up for losses through their cargo operations, but low-cost carriers do not have that option but have the same fixed-cost burden as the bigger airlines.
Korean airlines are suffering snowballing losses due to the weakening won. Carriers have to pay airplane leases and fuel and other fixed costs in U.S. dollars, and the exchange rate is working against them.
Korean Air loses around W35 billion for every W10 devaluation against the dollar (US$1=W1,342). That means if the exchange rate weakens from W1,200 to W1,300 per dollar, Korean Air loses around W350 billion.
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Budget carriers are in even bigger trouble. Korean Air and Asiana were able to make up for losses through their cargo operations, but low-cost carriers do not have that option but have the same fixed-cost burden as the bigger airlines.
Korean airlines are suffering snowballing losses due to the weakening won. Carriers have to pay airplane leases and fuel and other fixed costs in U.S. dollars, and the exchange rate is working against them.
Korean Air loses around W35 billion for every W10 devaluation against the dollar (US$1=W1,342). That means if the exchange rate weakens from W1,200 to W1,300 per dollar, Korean Air loses around W350 billion.
https://english.chosun.com/site/data/htm...00756.html
© This is copyrighted material owned by Digital Chosun Inc. No part of it may be reproduced or transmitted in any form or by any means without prior written permission.