Korean Air 2011 2Q Financial Results Jul 28, 2011
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 c 2
Summarized Financial Position Statements (Consolidated) (Unit : billion KRW) As of Jun 31, 2011 As of Dec 31, 2010 Changes (YOY) Amount Ratio Current Assets 2,960.6 2,732.7 227.9 8.3% Cash & Cash equivalents 904.0 851.6 52.4 6.2% Non-Current Assets 18,068.7 17,277.3 791.4 4.6% Aircraft 10,364.5 9,681.1 683.4 7.1% Investment in associates 2,739.0 2,606.3 132.7 5.1% Total Assets 21,029.3 20,010.0 1,019.3 5.1% Financial Liabilities 13,082.5 12,550.0 532.5 4.2% Current financial Liabilities 4,235.2 4,291.2 56.0 1.3% Non-current financial Liabilities 8,847.3 8,258.8 588.5 7.1% Other Liabilities 4,381.5 4,182.7 198.8 4.8% Total Liabilities 17,464.0 16,732.7 731.3 4.4% Total Shareholder s Equity 3,565.3 3,277.3 288.0 8.8% 3
Summarized Operation Statements (Consolidated) (Unit : billion KRW) 2011 2Q 2010 2Q Changes (YOY) 2011 1H 2010 1H Changes (YOY) Operating Revenue 2,944.4 2,886.9 2.0% 5,765.7 5,517.7 4.5% Operating Expense 2,964.1 2,491.9 19.0% 5,622.6 4,845.7 16.0% Operating Profit 19.7 395.0 Other Income/Expense 153.1 497.9 Foreign currency translation gain/loss 164.7 439.4 Finance Income/Expense 82.6 133.9 Loss 143.1 672.0-78.7% 346.6 429.4 369.3 315.9 Loss Amt Reduced 70.2 160.8 Loss Amt Reduced Net interest expense 134.1 153.9-12.9% 267.2 314.6-15.1% Profit share of accounted associates using equity method Income before Tax 50.8 236.8 Net Income 33.7 196.7 54.1 27.2 98.9% 191.3 32.6 486.8% 419.5 81.8 412.8% 304.6 48.8 524.2% 4
Summarized Operation Statements (Non-consolidated) (Unit : billion KRW) 2011 2Q 2010 2Q Changes (YOY) 2011 1H 2010 1H Changes (YOY) Operating Revenue 2,836.4 2,795.6 1.5% 5,555.7 5,353.5 3.8% Operating Expense 2,874.0 2,424.9 18.5% 5,448.1 4,722.2 15.4% Operating Profit 37.5 371.0 Other Income/Expense 151.7 496.5 Foreign currency translation gain/loss 164.9 438.8 Finance Income/Expense 119.7 144.6 Loss 107.6 631.3-83.0% 351.5 423.1 369.4 315.9 Loss Amt Reduced 206.4 256.3 Loss Amt Reduced Net interest expense 117.0 137.5-14.9% 233.2 281.2-17.1% Income before Tax 5.5 270.1 Net Income 4.4 223.4 Loss Amt Reduced 252.7 48.1 Loss Amt Reduced 185.1 57.0
Borrowings Currency As of Jun 31, 2011 As of Mar 31, 2011 Changes Local Weight Local Weight Amount Ratio USD 6.04 bil 54.8% 5.22 bil 52.5% 0.82 bil 15.7% KRW 4,360.2 bil 36.6% 4,413.8 bil 40.0% -53.6 bil -1.2% JPY 72.3 bil 8.1% 57.4 bil 6.9% 14.9 bil 26.0% EUR 0.036 bil 0.5% 0.039 bil 0.6% -0.003 bil -7.7% Total (in USD) 11.04 bil 100% 10.09 bil 100% 0.95 bil 9.4% Applied FX rates per $ 1 USD : KRW 1,078.10, JPY 80.71, EUR 0.69 6
Revenue Composition 2Q Operating Revenue : 2.84 trillion KRW (+1.5% YOY) Cgo 31.8% Inflight Sales 2.1% Others 4.1% Aerospace 3.7% Int'l Pax 52.3% Catering 0.6% Hotel/Limousine 0.4% Dom Pax 5.0%
Passenger Traffic Description Domestic Passenger International Passenger 2011 2Q 2010 2Q Changes 2011 2Q 2010 2Q Changes Supply (Mil ASK) 1,004 1,105-9.1% 18,847 18,104 4.1% APR 334 372-10.2% 6,021 5,868 2.6% MAY 349 386-9.6% 6,434 6,226 3.3% JUN 321 347-7.5% 6,392 6,011 6.3% Traffic (Mil RPK) 721 788-8.5% 14,748 13,858 6.4% APR 243 273-11.0% 4,603 4,419 4.2% MAY 258 284-9.2% 5,093 4,719 7.9% JUN 220 231-4.8% 5,052 4,719 7.1% L/F(%) 71.8% 71.3% 0.5%p 78.3% 76.5% 1.8%p Yield (US Cent) 17.7 15.6 13.5% 9.1 8.1 12.4% * Mileage passengers included in 2011 RPK figures
Passenger Revenue Breakdown by Route Operation 500 400 300 200 100 0 Domestic Japan China SEA Americas Europe Oceania 2011 2Q 2010 2Q (unit : billion KRW) Europe 16.1% Oceania 3.6% Domestic 8.7% Japan 11.9% Europe 15.6% Oceania 3.8% Domestic 9.9% Japan 14.4% Americas 34.4% 2011 2Q China 11.6% SEA 13.6% Americas 33.5% 2010 2Q China 10.2% SEA 12.6%
Passenger Revenue Breakdown by Regional Sales 900 600 2011 2Q 2010 2Q (unit : billion KRW) 300 0 Korea Japan China SEA Americas Europe Americas 17.4% Europe 4.5% Korea 52.7% Americas 17.7% Europe 4.9% Korea 53.0% SEA 6.5% 2011 2Q SEA 6.8% 2010 2Q China 6.1% Japan 12.8% China 5.7% Japan 11.9%
Passenger Business Overview 2Q Capacity & Traffic Summary Total passenger traffic increased 2% (Korea outbound -4% / Korea inbound & Transit +7%) China outbound US transit passenger increased 24% (YOY) Japan outbound traffic recorded a constant growth while Japan inbound traffic slowed down RPK : Americas(+9%), SEA (+16%), China(+13%), Europe(+2%) and Japan(-13%) 3Q Business Plan Stronger growth of Korea outbound traffic (Recovery from Japan disaster, Middle East political issues and more) Increase Premium class sales (with introduction of A380s and new A/Cs) New route : Gimpo/Beijing, Cheongju/Hangzhou, Busan/Manila, Cairo Frequency Increase : Chicago, Ho Chi Minh, Siem Reap, Phuket, Sapporo, New York(A380) 11
Cargo Traffic Description Cargo (Domestic + International) 2011 2Q 2010 2Q Changes Supply (Mil AFTK) 3,015 3,215-6.2% APR 1,008 1,037-2.8% MAY 1,005 1,111-9.5% JUN 1,002 1,067-6.1% Traffic (Mil FTK) 2,292 2,503-8.4% APR 771 812-5.0% MAY 764 872-12.4% JUN 757 819-7.6% L/F(%) 76.0% 77.9% -1.9%p Yield (US Cent) 33.6 32.3 4.0% 12
Cargo Revenue Breakdown by Route Operation 400 300 2011 2Q 2010 2Q (unit : billion KRW) 200 100 0 Domestic Japan China SEA Americas Europe Oceania Europe 29.2% Oceania 1.2% Domestic 0.7% Japan 5.5% China 10.5% Europe 30.2% Oceania 0.8% Domestic 0.6% Japan 4.2% China 9.9% 2011 2Q SEA 12.5% 2010 2Q SEA 11.1% Americas 40.4% Americas 43.2%
Cargo Revenue Breakdown by Regional Sales 400 300 200 2011 2Q 2010 2Q (unit : billion KRW) 100 0 Korea Japan China SEA Americas Europe Europe Europe Americas 11.4% 11.6% Korea 30.1% Americas 8.2% SEA 6.8% Korea 38.5% SEA 2011 2Q 12.5% 2010 2Q 13.3% China 21.3% Japan 12.3% China 25.5% Japan 8.5%
Cargo Business Overview 2Q Capacity & Traffic Summary Korea outbound decreased 30% while traffic from Japan(+13%), America(+8%) and Europe(+12%) increased. For Korea outbound, Display (-71%) and Cell phone(-11%) products decreased while Auto related parts(+13%) and Semi conductors (+14%) increased Developed new routes and market (Spain, Trans Atlantic (New York-Brussels), Turkey and Qatar routes) 3Q Business Plan Enhance profitability through controlled capacity and new market developments Japan route is expected to show a continuous traffic growth Korea-EU FTA (Export and Import amount between Korea and EU is expected to increase 19% and 16% each in July) 15
Expense Breakdown 영업수익 x 억원 2011 2Q (2,874 billion KRW) Others 19.6% 2010 2Q (2,425 billion KRW) Others 19.3% Sales Sales Commission 3.8% Jet Fuel 40.4% Commission 5.1% Jet Fuel 35.7% Airport Airport Related Related 9.3% Rental & Depreciation Labor 13.4% 10.9% Rental & Depreciation Labor 14.7% 13.4% 14.3% 16
Key Expenses (Unit : billion KRW) 2011 2Q 2010 2Q Changes Jet Fuel 1,162.2 865.0 34.4% Consumption (Mil bbl.) 7.77 7.72 0.6% Average Unit Price (U$) 136.3 93.2 46.2% Labor 384.5 357.3 7.6% A/C Rental 51.2 63.2-19.0% No. of rented A/C (as end of 2Q) 24 27-11.1% A/C Depreciation 294.6 243.2 21.1% No. of A/C (as end of 2Q) 118 107 10.3% 17
Fleet Status & Delivery Plan Fleet Type Current Status (as Jun 31, 2011) Delivery plan for 2011 2H A380 1 4 A330 23 - A300 8 - B747 18 - B777 30 1 B737 32 4 Passenger TTL 112 9 B747F 24 2 Cargo TTL 24 2 Total 136 11 Above chart does not include A/C rented out to Jin Air and Uzbekistan 18
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