Korean Air Lines provided some rare positive news for the devastated global aviation industry, reporting a quarterly profit after flying planes loaded with products from South Korean technology giants to homebound consumers around the world.
The carrier’s operating profit was 148.5 billion won ($125 million) for the April-June period. Cargo sales climbed 95% from a year earlier to 1.23 trillion won. Asiana Airlines could follow suit with an operating profit of 43.7 billion won when it reports next week, according to the average estimate of analysts tracked by Bloomberg.
The profit comes as other airlines are reporting record losses; slashing routes, jobs and salaries; or collapsing altogether because of the impact Covid-19 has had on travel. The crisis has forced some carriers to retrofit their planes to haul more cargo and generate much-needed cash from surging airfreight rates.
“The cargo business has come to the rescue yet again when things are going bad,” said Um Kyung-a, an analyst at Shinyoung Securities Co. “Countries will be in need of goods to restart their economies as many emerge from shutdowns due to the outbreak.”
Hedge-fund manager David Einhorn is on board, telling investors he bought a stake in Atlas Air Worldwide Holdings Inc in the second quarter because he expects the cargo carrier to benefit from a shortage of airfreight capacity.
Korean Air and Asiana benefit from enormous demand for smartphones, TVs and components from Samsung Electronics Co and memory chips from SK Hynix Inc, said Bang Min-jin, an analyst at Eugene Investment & Securities Co in Seoul. South Korea’s overseas shipments of semiconductors, rose 2.9% in June from May.