Korean Air Lines reported a 41 percent drop in quarterly operating profit, hit by higher fuel costs but said it expected cargo demand to improve following the March 11 earthquake in Japan.
South Korea's number one airline posted KRW163 billion Korean won (USD$153 million) in consolidated operating profit for the January-March quarter under new accounting rules, down from KRW277 billion won a year earlier, as fuel costs rose by 30 percent.
Net profit, however, jumped 50 percent to KRW282 billion, thanks to foreign exchange translation gains from a stronger won and solid results from its affiliates, the company said on Tuesday.
The South Korean flag carrier said it expected cargo traffic to improve in the current quarter, driven by post-quake demand rise and diversification efforts by global manufacturers to secure components and raw materials outside quake-hit Japanese suppliers.
Analysts expect strengthening Korean won help boost outbound passenger traffic and ease the pressure of high fuel costs.
"Concerns over a drop-off in travel demand after Japan's earthquake are easing with prospects over the global economic recovery," said Jung Yun-jin, an analyst at Kyobo Securities.
Korean Air said it would begin Airbus A380 services from June and take delivery of Boeing's 787 Dreamliners in 2016, five years later than initially planned.
The airline said that it would spend KRW1.69 trillion (USD$1.6 billion) to buy seven aircraft from Boeing and Airbus.
South Korea's flag carrier said in a regulatory filing that it would buy two Boeing 777 and five Airbus A330 passenger planes.
*Reuters