Flights Suspensions Due to Virus Tipped to Hit Airlines' Q1 Results | Be Korea-savvy

Flights Suspensions Due to Virus Tipped to Hit Airlines’ Q1 Results

A B787-9 passenger jet in flight. (image: Korean Air)

A B787-9 passenger jet in flight. (image: Korean Air)

SEOUL, Feb. 13 (Korea Bizwire)South Korean airlines’ first-quarter earnings may be dismal as they suspended or reduced flights on international routes amid the spreading COVID-19 virus outbreak, analysts said Thursday.

In their latest move to respond to the virus, Asiana Airlines Inc., the country’s second-biggest airline after Korean Air Lines Co., said it will halt flights on two additional routes and reduce services on five more routes for several weeks depending on each route’s schedule.

A day earlier, Jeju Air Co., the country’s biggest low-cost carrier, entered an emergency management system to cut costs and stay afloat as the novel coronavirus shows no sign of slowing.

Analysts say the deadly respiratory virus is adding to woes of airlines already suffering a sharp decline in travel demand on Japanese and Hong Kong routes over political tensions between Seoul and Tokyo since July and local protests against the Chinese government, respectively.

“As airlines are expected to reduce more flights due to declining demand, particularly on short-haul routes to Southeast Asia, they won’t likely to report an operating profit in the first half,” Kim Yu-hyuk, an analyst at Hanwha Securities Co., said.

On Friday, Korean Air is expected to announce its plan to further reduce the number of flights on Asian routes, a company spokeswoman said without elaborating.

Brokerages forecast travel demand to rebound in the second half only when the spread of the coronavirus slows down by the end of the first quarter.

Korean Air’s net losses deepened to 624.87 billion won (US$529 million) in 2019 from 185.65 billion won a year earlier. Asiana’s net losses widened to 837.79 billion won from 195.86 billion won during the same period.

Jeju Air swung to a net loss of 34.1 billion won last year from a net profit of 70.88 billion won a year ago.

Faced with lower demand on China and other international routes, Korean Air had already suspended 20 of its 30 routes to China, while reducing the number of flights on eight routes and maintaining services on two routes.

Starting this month, Asiana halted six routes to China, reduced flights on 15 routes and kept five routes to the world’s most populous country.

Korean Air and Asiana have not suspended or reduced flights on routes to Hong Kong and Taiwan.

But Asiana said Thursday it will suspend services on the Incheon-Taichung, Taiwan route from Feb. 26 to March 15.

On top of the suspension of the Incheon-Taichung route, Asiana will halt the Incheon-Chiang Mai route from March 3-15 and reduce the number of flights on five routes from Incheon to Bangkok, Hanoi, Singapore, Nha Trang and Saipan beginning next week.

This photo taken on Feb. 3, 2020, and provided by Jeju Air shows airport personnel preparing quarantine work for passengers on an arriving airplane at Jeju International Airport.

This photo taken on Feb. 3, 2020, and provided by Jeju Air shows airport personnel preparing quarantine work for passengers on an arriving airplane at Jeju International Airport.

Airlines hope the coronavirus will be contained at the earliest date possible as their business has already been affected by lower travel demand to Japan since July due to Japan’s export curbs.

In July, Japan tightened regulations on exports to South Korea of three high-tech materials crucial for the production of semiconductors and displays.

In August, Japan officially removed South Korea from its list of countries given preferential treatment in trade procedures.

Japan took the moves in apparent retaliation against a Seoul court ruling that ordered Japanese companies to compensate South Korean workers forced into labor during World War II.

Low-cost carriers also joined the full-service carriers by readjusting their flight schedules to China from this month.

Jeju Air has gradually suspended seven out of 17 routes to mainland China since Jan. 29.

It also temporarily halted the Incheon-Macao route from Friday and reduced the number of flights on the Incheon-Weihai route from Monday, while planning to halt the Jeju Island-Hong Kong route from Feb. 19.

Jeju Air currently serves eight routes to Hong Kong, Macao and Taiwan.

Jin Air Co. and Air Busan Co. suspended most of their flights to China early this year. Jin Air, which already halted the Incheon-Macao route from Friday through the end of February, said it plans to keep the Jeju-Xian and Jeju-Shanghai routes on hold until the end of March.

Air Busan said it will maintain the suspension of its Chinese routes until the end of March, an extension from its originally scheduled end-February.

South Korea has two full-service carriers — Korean Air and Asiana Airlines — and seven low-cost carriers — Jeju Air, Jin Air, Air Busan, Air Seoul, Eastar Jet, T’way and Fly Gangwon.

On Thursday, Korean Air fell 0.2 percent to 26,050 won, Asiana declined 0.9 percent to 4,995 won and Jeju Air shed 1.1 percent to 23,200 won, in line with the broader KOSPI’s 0.2 percent loss.


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