Asiana Airlines posted a net loss during the term due to the burden of interest costs

Asiana Airlines posted a net loss during the term due to the burden of interest costs: COMPANY / Reporter Paul Lee / 2023-08-22 01:08:54

[Apha Biz=(Chicago) Reporter Paul Lee] Although it recorded an operating profit of more than 200 billion won in the first half of this year, it failed to overcome the interest cost burden and recorded a net loss during the term.

This is in contrast to most domestic airlines' net profit of tens of billions to hundreds of billions of won in the first half of this year.

Some say that the increase in interest costs for Asiana Airlines is related to the delay in the merger between Korean Air and Asiana Airlines. The delay in approval by foreign rival authorities has delayed funding for Asiana Airlines.

Asiana Airlines' sales in the first half of this year reached 3.254 trillion won (based on separate financial statements), up 18.3% from a year earlier. Operating profit fell 48.1% to 201.4 billion won during the period. Operating profit declined as the special effects of the cargo industry, which lasted until the first half of last year, ended. Still, the profit of 201.4 billion won is not small.

The problem is that even though it recorded operating profit of more than 200 billion won in the first half of this year, there is no money left in hand. Asiana Airlines posted a net loss of 60.2 billion won in the first half of this year, up 9 percent from a year earlier. Net profit (loss) is an operating profit minus non-operating expenses such as corporate tax and financial expenses.

The direct cause of the net loss is an increase in interest costs. Asiana Airlines' interest cost in the first half of this year was 202.3 billion won, up 20.6% from a year earlier. The interest cost was higher than the operating profit.

Asiana Airlines has been paying KRW 300 billion in interest every year since 2019. Since 2019, when it was recognized as debt, aircraft lease-related costs have resulted in interest costs of 334.9 billion won in 2019, 360 billion won in 2020, 319.5 billion won in 2021 and 371 billion won in 2022. Among them, interest costs on short- and long-term borrowings rose sharply, up more than five times (KRW 167 billion) at the end of last year from KRW 32.4 billion in 2019.