Paul Lewis/SINGAPORE
Financially troubled South Korean carrier Asiana Airlines has released end-of-year results for 1997, showing a massive net loss, rivalling the deficit reported by rival Korean Air (KAL).
Asiana lost 398 billion won ($270 million) for 1997, largely because of heavy foreign exchange losses from the collapse of the South Korean won, which has dropped 75% of its value against the US dollar.
The privately owned airline had made a loss of 54 billion won in 1996, following a 20 billion won profit. A breakdown of figures, obtained by Flight International, shows that airline sales grew by 13% to just under 1.4 trillion won, helped by the rising dollar, but costs rose by nearly one-third. As a result, Asiana's operating figures slumped to a loss of 4.7 billion won.
KAL also suffered a net loss of 397 billion won, although that came after taking costs of nearly 1,000 billion won against exchange rate adjustments. The airline group managed to show an improvement in underlying operating profits to 361 billion won, which many analysts admit was above expectations. Salomon Smith Barney raised its forecast, pointing to the strong dollar-led rise in international passenger yields, and expects a strong upturn this year provided the won recovers.
Analysts suggest that foreign exchange losses have been worsened for both airlines by poor cost control. "KAL and Asiana have to improve their cost structure-they really need to downsize," says HG Asia's Keith Nam.
Meanwhile, efforts by Asiana's parent Kumho group to to sell 30% of the airline's stock is reportedly attracting the interest of Taiwan's China Development Corporation. British Airways and American Airlines have also shown interest.
Source: Flight International