KOREAN AIR 4Q17 FINANCIAL RESULTS 1
Disclaimer This presentation is for informational purposes only, contains preliminary financial and other information about Korean Air Lines Co., Ltd. and is subject to updating, revision, amendment and completion. This presentation does not and is not intended to constitute or contain any offer of securities for sale or a solicitation of an offer to purchase any securities of Korean Air Lines Co., Ltd. or any other company and neither this presentation nor anything contained herein shall form the basis of any contract or commitment. Certain statements contained in this presentation may be statements of future expectations and other forward-looking statements or trend information that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those in the forward-looking statements in this presentation. In addition to statements which are forwardlooking by reason of context, including without limitation, statements referring to risk limitations, operational profitability, financial strength, performance targets, profitable growth opportunities, and risk adequate pricing, the words "may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, or continue", "potential, future, or further", and similar expressions are intended to identify forward-looking statements. Korean Air Lines Co., Ltd. assumes no obligation to update or revise any such statements or any other information contained herein to reflect events or circumstances that may arise after the date of this presentation. 2
Financial Position (Non-consolidated) (billion KRW) End of 2016 End of 2017 Changes Rate Current Assets 2,876 3,281 406 14.1% Cash & Cash equivalent 746 576-170 -22.8% Non-Current Assets 19,830 20,282 451 2.3% Aircraft related assets 13,728 14,308 580 4.2% Total Assets 22,706 23,563 857 3.8% Financial Liabilities 15,391 13,829-1,563-10.2% Other Liabilities 5,662 6,062 401 7.1% Total Liabilities 21,053 19,891-1,162-5.5% Total Equity 1,653 3,672 2,019 122.1% Debt Ratio 1,274% 542% -732%p 3
Income Statement (Non-consolidated) 2016 4Q 2017 4Q (billion KRW) Changes 2016 2017 Changes Sales 2,868 3,015 5.1% 11,503 11,803 2.6% Operating Expense 2,693 2,784 3.4% 10,424 10,847 4.1% Fuel Expense 593 708 19.4% 2,190 2,616 19.5% Operating Profit 175 231 31.7% 1,079 956-11.4% Operating Profit Rate 6.1% 7.7% 1.6%p 9.4% 8.1% -1.3%p Non-Operating Profit -1,046 404-1,821 262 Foreign currency related gain/loss, net -884 608-296 1,013 Interest expense, net -103-97 -373-399 Income Before Tax -871 635 Net Income -672 479 Turn to profit Turn to profit -742 1,218-591 908 Turn to profit Turn to profit 4
Revenue Composition (Non-consolidated) 4Q2016 (2,868 billion KRW) 4Q2017 (3,015 billion KRW) Cargo 24.7% Others 11.1% Aerospace 8.5% International Passenger 51.6% Cargo 26.4% International Passenger 53.9% Others 10.3% Aerospace 5.4% Domestic Passenger 4.1% Domestic Passenger 4.0% 5
Annual Revenue Change (Non-consolidated) 2017 Total Revenue : 11.8 trillion KRW increased +2.6% yoy (+299.9 billion KRW) 2017 2016 trillion KRW 0 1 2 3 4 5 6 7 Cargo Domestic Passenger +13.3 (billion KRW) 23.8% Others 10.3% International Passenger +66.5 Aerospace 6.2% Cargo +365.0 International passenger Aerospace -170.8 55.4% Domestic Others +25.9 Passenger 4.3% 6
Passenger Revenue by Route Operations [billion KRW] 800 4Q16 4Q17 600 +6% 400 +3% +0% +20% +18% 200 +3% +8% 0 Domestic Japan China SEA Oceania Americas Europe [Revenue : Routes] [Revenue : Regional Sales] Oceania Americas 26% Europe 17% Europe 6% Americas 16% 5% SEA 22% 4Q17 China 12% Domestic 7% Japan 11% SEA 8% China 7% Japan 6% 4Q17 Korea 57%
Passenger Traffic Growth Trend 2017 Passenger Traffic Growth (RPK) increased +2.6% yoy million RPK 80,000 75,000 RPK(L) 좌 ) 여객 L/F(R) L/F( 우 ) 77.0% 76.1% 77.9% 76.7% 76.9% 78.5% 79.3% 80.0% 78.0% 70,000 74.7% 76.0% 74.0% 65,000 72.0% 60,000 69.8% 70.0% 55,000 68.0% 50,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 66.0% 8
Passenger Business Overview 4Q17 Business Summary Traffic(RPK) Changes : SEA 10%, Europe 8%, Oceania 4%, Americas 4%, Japan 2%, China 4% Number of Passengers Carried : 5% (Korea Outbound 17%, Overseas 8% ) 2018 Business Outlook & Plan Worldwide air passenger traffic to increase +6.0% YoY - IATA Opening of ICN Airport Terminal 2, PyeongChang Olympics, and JV partnership with Delta Airlines to increase overall demand in the passenger sector. To constantly monitor China & Japan demand for capacity restoration as the sales recover from THAAD installation & North Korea related issues Frequency Expansion : Incheon - Madrid / Istanbul / Aomori / Sapporo 9
Passenger Traffic International Domestic 4Q16 4Q17 YoY 4Q16 4Q17 YoY Capacity (Mil ASK) 22,414 23,991 7.0% 908 875-3.7% Oct 7,673 8,118 5.8% 340 325-4.6% Nov 7,154 7,678 7.3% 286 275-4.1% Dec 7,587 8,196 8.0% 281 276-2.1% Traffic (Mil RPK) 17,525 18,418 5.1% 699 675-3.3% Oct 6,068 6,218 2.5% 272 254-6.5% Nov 5,457 5,897 8.1% 223 219-1.7% Dec 6,000 6,302 5.0% 203 202-0.7% L/F(%) 78.2% 76.8% -1.4%p 77.0% 77.2% 0.3%p 10
Cargo Revenue by Route Operations [billion KRW] 400 300 200 100 0 4Q16 4Q17 +12% +15% +20% +8% +24% -9% +28% Domestic Japan China SEA Oceania Americas Europe [Revenue : Routes] [Revenue : Regional Sales] Europe Americas 42% 4Q17 Europe 27% Japan 5% China Domestic 1% Americas 12% SEA 14% 12% 4Q17 Korea 25% Japan 11% SEA 10% China Oceania 14% 26% 1%
Cargo Traffic Growth Trend 2017 Cargo Traffic Growth (FTK) increased +5.3% yoy million FTK 10,000 FTK( FPK(L) 좌 ) 화물 L/F(R) L/F( 우 ) 79.5% 80.0% 9,500 9,000 76.3% 76.3% 77.0% 77.9% 76.9% 78.5% 79.0% 78.0% 77.0% 8,500 75.4% 76.0% 8,000 74.7% 75.0% 74.0% 7,500 73.0% 7,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 72.0% 12
Cargo Business Overview 4Q17 Business Summary Traffic(FTK) Change : Oceania 32%, Japan 17%, Americas 3%, Europe 3%, SEA 2%, China 0% Total Tonnage Carried : 5% (Korea Outbound 2%, Overseas 7% ) 2018 Business Outlook & Plan The demand for air cargo in 2018 to increase +4.5% yoy (IATA) Global economy to grow +3.9% (IMF) Positive indicator for air cargo - Reduction of U.S. corporate tax rate - Steady demand for IT devices delivered from the Asia-Pacific region To secure profitability of cargo business by expanding air cargo transport product and flexible capacity management 13
Cargo Traffic Cargo (International + Domestic) 4Q16 4Q17 YoY Capacity (Mil AFTK) 2,750 2,854 3.8% Oct 921 913-0.8% Nov 946 983 3.8% Dec 883 958 8.5% Traffic (Mil FTK) 2,205 2,280 3.4% Oct 736 724-1.6% Nov 752 786 4.5% Dec 718 771 7.4% L/F (%) 80.2% 79.9% -0.3%p 14
Operating Expense Breakdown (Non-consolidated) 4Q16 (2,693 billion KRW) 4Q17 ( 2,784 billion KRW) Rentals 3% Commission 3% In-flight Service 4% Maintenance 5% Fuel 22% Airport related 11% Labor 17% Depreciation 16% Others 19% Rentals 3% Commission 3% In-flight Service 4% Maintenance 4% Fuel 25% Airport related 11% Labor 17% Depreciation 15% Others 18% 15
Annual Operating Expense Change (Non-consolidated) 2017 Total Operating Expense : 10.8 trillion KRW, increased +4.1% yoy (+422.7 billion KRW) 2017 2016 Rentals trillion KRW 0 1 2 3 4 5 3% Fuel 24% Labor 18% Fuel Labor +426.1 (billion KRW) +85.6 Commission 3% Depreciation 15% Depreciati on -88.0 In-flight Service 4% Maintenance 4% Airport related 11% Otehrs 18% Rentals Others +63.6-64.6 16
Fleet Status (As of Dec 31 st, 2017) Type No. of Aircrafts Delivery in 2018(month) A380 10 A330 29 B747-400 4 B747-8I 10 B777 38 2345 B787-9 5 67912 B737 35 CS300 2 234567810 Passenger Total 133 16 B747F 9 B747-8F 7 B777F 12 Cargo Total 28 0 Total 161 16 17
Borrowings (Non-consolidated) (billion) End of 2016 End of 2017 Changes Balance (billion) Ratio Balance (billion) Ratio Balance (billion) Ratio USD 8.1 62.5% 7.2 55.6% -0.9-11.1% KRW 3,830 25.6% 4,150 30.0% 320 8.4% Others (EUR/JPY/HK D in USD) SUM (KRW) 1.5 11.9% 1.9 14.4% 0.4 26.7% 15,390 100% 13,830 100% -1,560-10.1% - FX Rate as of Dec. 31 st, 2016 : USD1 / KRW1,208.5 - FX Rate as of Dec. 31 st, 2017 : USD1 / KRW1,071.4 18
Thank you 19