Manila Bulletin
July 31, 2012 Tuesday
Etihad Airways will launch daily flights to Ho Chi Minh City, Vietnam's commercial capital and most populous city, in October, 2013.
It will be Etihad Airways' sixth online destination within the Association of Southeast Asian Nations (ASEAN) region, joining Bangkok, Jakarta, Kuala Lumpur, Manila, and Singapore.
In conjunction with its partner airlines, the new Ho Chi Minh City service extends Etihad Airways' total flight network reach 21 ASEAN destinations.
The new air services to Ho Chi Minh City are set to meet growing demand from Vietnam's rapidly expanding economy and will support the country's increasing commercial ties with the United Arab Emirates, and in particular Abu Dhabi.
James Hogan, Etihad Airways President and Chief Executive officer, said: "We are delighted to announce the introduction of Ho Chi Minh City to the Etihad Airways' global flight network. Like our home-base of Abu Dhabi, it is a vibrant, culturally rich and expanding city popular with business and leisure travellers."
"The route will be ideal to carry passengers and cargo point-to-point from the United Arab Emirates, as well as from Etihad Airways destinations in the Middle East, Europe, and North and South America, " he said.
The new flight services will further support joint UAE and Vietnam government ventures in areas of energy, infrastructure, tourism, and civil construction. UAE investment in Vietnman now stands at more than US$3 billion and two-way trade revenue approximately US$1.3 billion.
Hogan added: "Etihad Airways has a strong South East Asian Network and the addition of daily services to Ho Chi Minh City underlines our commitment to this region that continues to experience strong commercial growth across many industries, especially tourism, manufacturing and technology."
Tran Ngoc Thach, ambassador of Vietnam to the UAE, said: "I believe that Etihad's direct flights to Vietnam will contribute to improving understanding between the two peoples of Viet Nam and the UAE. More and more tourists will come to Viet Nam and a greater number of tourists will come to the UAE. They will also help to increase trade and tourism between our two countries for the benefit of the people and countries."
Flights between Abu Dhabi and Ho Chi Minh City will begin on October 1, 2013 and will be served by a two-class A330-200 aircraft. The aircraft will have 22 pearl Business Class seats and 240 Coral Economy Class seats- a total 3,668 seats per week.
Tuesday, July 31, 2012
Singapore Airlines To Adjust Network Frequency Flights This Coming Oct.
Manila Bulletin
July 31, 2012 Tuesday
Singapore Airlines (SIA) will be making network adjustments during the northern winter operating season from 28 October 2012 to 30 March 2013, involving capacity increases on several routes, reductions on others and seasonal aircraft changes.
SIA said the adjustments are in line with efforts to redeploy capacity to markets where demand is stronger.
In Australia, a fourth daily service will be operated to Perth, up from three flights per day. Capacity will also increase to Melbourne with the Airbus A380 superjumbo used for two of the three daily flights, up from one. This will take effect from 16 August and continue through the northern winter season.
In India, Mumbai services will increase to 21 per week from 19 from the start of the northern winter season.
As previously announced, frequency to London Heathrow will increase to four flights per day from three.
A daily Hong kong flight which continues to San Francisco will be served with the A380 instead of the Boeing 777-300ER on a seasonal basis between 28 December 2012 and 24 March 2013. This will increase to two the number of Hong kong flights served each day with the A380, while it will be the first time SIA will be operating the A380 to San Francisco.
Tokyo Narita will be served with two A380s each day instead of one. This will also be on a seasonal basis between 28 December and 24 March in place of B777-300ER services. The existing A380 service will continue to operate to Tokyo Narita and beyond to Los Angeles.
New Singapore-Riyadh-Jeddah flights will be operated three times per week, in place of existing services to Riyadh via Dubai and to Jeddah via Abu Dhabi. As previously announced, Abu Dhabi services will be suspended from late October, as will Athens services.
Frequency to both Milan in Italy and Barcelona in Spain will be reduced to five times per week from seven. Singapore-Istanbul services will be reduced to four flights per week from five.
Singapore-Frankfurt-New York A380 services will be switched to B777-300ER services on a seasonal basis between 27 December and 24 March.
July 31, 2012 Tuesday
Singapore Airlines (SIA) will be making network adjustments during the northern winter operating season from 28 October 2012 to 30 March 2013, involving capacity increases on several routes, reductions on others and seasonal aircraft changes.
SIA said the adjustments are in line with efforts to redeploy capacity to markets where demand is stronger.
In Australia, a fourth daily service will be operated to Perth, up from three flights per day. Capacity will also increase to Melbourne with the Airbus A380 superjumbo used for two of the three daily flights, up from one. This will take effect from 16 August and continue through the northern winter season.
In India, Mumbai services will increase to 21 per week from 19 from the start of the northern winter season.
As previously announced, frequency to London Heathrow will increase to four flights per day from three.
A daily Hong kong flight which continues to San Francisco will be served with the A380 instead of the Boeing 777-300ER on a seasonal basis between 28 December 2012 and 24 March 2013. This will increase to two the number of Hong kong flights served each day with the A380, while it will be the first time SIA will be operating the A380 to San Francisco.
Tokyo Narita will be served with two A380s each day instead of one. This will also be on a seasonal basis between 28 December and 24 March in place of B777-300ER services. The existing A380 service will continue to operate to Tokyo Narita and beyond to Los Angeles.
New Singapore-Riyadh-Jeddah flights will be operated three times per week, in place of existing services to Riyadh via Dubai and to Jeddah via Abu Dhabi. As previously announced, Abu Dhabi services will be suspended from late October, as will Athens services.
Frequency to both Milan in Italy and Barcelona in Spain will be reduced to five times per week from seven. Singapore-Istanbul services will be reduced to four flights per week from five.
Singapore-Frankfurt-New York A380 services will be switched to B777-300ER services on a seasonal basis between 27 December and 24 March.
Monday, July 30, 2012
First A380 repair completed in Manila
(Lufthansa Technik Philippines reconfigures Qantas jet's cabin)
Paolo G. Montecillo
Philippine Daily Inquirer
July 30, 2012 Monday
MANILA-based aircraft maintenance firm Lufthansa Technik Philippines (LTP) reached a milestone this month after completing the reconfiguration of a Qantas Airbus A380 plane's passenger cabin- a feat that has been done nowhere else in the world.
In a statement at the weekend, LTP said the project's completion asserted the company's position as one of the world's premiere aircraft maintenance, repair and overhaul (MRO) providers.
"Of the 75 A380 aircraft in service all over the world, this is the first aircraft to undergo cabin reconfiguration," LTP said. The Qantas plane is the second A380 to land on Philippine soil. Currently, there are no conmmercial passenger flights to the Philippines that use A380 jets.
The Airbus A380, a doubledeck, wide-bodied jetliner, is the world's largest passenger plane. The first A380s went into commercial service in 2007.
For the first reconfiguration, licensed aircraft maintenance engineers and technical representatives from Qantas Airways were on site to work hand in hand with Lufthansa Technik Philippines engineers and mechanics. Likewise, experts from Airbus and suppliers were also present to help.
Apart from the cabin upgrades, LTP said it also completed an upgrade of the A380's internal wing "rib" structure. "The expertise of LTP's structures team was a significant factor in the success of the wing-rib modification and in lessening its impact on the turn around time of the cabin reconfiguration," the company said.
Eleven more A380s from Qantas were set to arrive and have their cabins reconfigured at LTP's Manila facility. Service on the arriving planes will be done solely by LTP personnel, who recently completed A380-specific training programs in Frankfurt, Germany.
LTP's A380 hangar opened earlier this year. The facility cost $30 million to build.
"The great collaboration of LTP with Qantas, Airbus, and Lufthansa Technik forms part of the success of this cabin reconfiguration project," the company added.
The reconfiguration and later on the decision to carry out wing-rib inspection and repair started exactly a year after the ground-breaking of Lufthansa Technik Philippines' newest wide-body aircraft hangar.
The construction of the company's preparations for the technical support of the world's largest commercial aircraft.
Paolo G. Montecillo
Philippine Daily Inquirer
July 30, 2012 Monday
MANILA-based aircraft maintenance firm Lufthansa Technik Philippines (LTP) reached a milestone this month after completing the reconfiguration of a Qantas Airbus A380 plane's passenger cabin- a feat that has been done nowhere else in the world.
In a statement at the weekend, LTP said the project's completion asserted the company's position as one of the world's premiere aircraft maintenance, repair and overhaul (MRO) providers.
"Of the 75 A380 aircraft in service all over the world, this is the first aircraft to undergo cabin reconfiguration," LTP said. The Qantas plane is the second A380 to land on Philippine soil. Currently, there are no conmmercial passenger flights to the Philippines that use A380 jets.
The Airbus A380, a doubledeck, wide-bodied jetliner, is the world's largest passenger plane. The first A380s went into commercial service in 2007.
For the first reconfiguration, licensed aircraft maintenance engineers and technical representatives from Qantas Airways were on site to work hand in hand with Lufthansa Technik Philippines engineers and mechanics. Likewise, experts from Airbus and suppliers were also present to help.
Apart from the cabin upgrades, LTP said it also completed an upgrade of the A380's internal wing "rib" structure. "The expertise of LTP's structures team was a significant factor in the success of the wing-rib modification and in lessening its impact on the turn around time of the cabin reconfiguration," the company said.
Eleven more A380s from Qantas were set to arrive and have their cabins reconfigured at LTP's Manila facility. Service on the arriving planes will be done solely by LTP personnel, who recently completed A380-specific training programs in Frankfurt, Germany.
LTP's A380 hangar opened earlier this year. The facility cost $30 million to build.
"The great collaboration of LTP with Qantas, Airbus, and Lufthansa Technik forms part of the success of this cabin reconfiguration project," the company added.
The reconfiguration and later on the decision to carry out wing-rib inspection and repair started exactly a year after the ground-breaking of Lufthansa Technik Philippines' newest wide-body aircraft hangar.
The construction of the company's preparations for the technical support of the world's largest commercial aircraft.
Friday, July 27, 2012
Can P-Noy deliver Cat-1 upgrade?
The Philippine Star
July 27, 2012
DEMAND AND SUPPLY By Boo Chanco
It was a grand launch by Philippine Airlines last Monday of their new planes, new in-flight cuisine and new flight attendants. It is new management after all, led by San Miguel’s Ramon Ang, and you can feel they are raring to go.
Except for one thing… one big thing… we are still mired for almost five years now in the ignominy of a Category 2 downgrade by the US Federal Aviation Administration (FAA) based on technical reviews. Two other foreign aviation regulatory entities aside from the FAA have downgraded us: the EU and the ICAO or the International Civil Aviation Organization.
What these agencies are saying is that our country’s aviation regulatory set-up is highly deficient or unsafe. It is so unsafe that the Europeans who come here as tourists and ride Philippine-registered aircrafts do so at their own risk. Their insurance will not cover those rides on PAL, Cebu Pacific, Zest, SEAir, etc.
Well… what can we say? Philippine aviation used to be regulated by the Air Transportation Office. Congress quickly passed the bill establishing CAAP or the Civil Aviation Authority of the Philippines after the downgrade during the watch of Ate Glue. CAAP was supposed to be a more autonomous authority that will improve the situation.
But nothing has so far convinced the FAA and ICAO and the Europeans that we deserve a restoration to Category 1. It wasn’t surprising we got nowhere during the watch of Ate Glue. Her DOTC Secretary then, a former police officer, was more interested in other things like the ZTE deal.
When P-Noy took over, he appointed the Aquino family pilot to head CAAP even when industry murmurs indicated he didn’t have the necessary managerial skills for such a critical mission. I took the pains of listening to Ramon Gutierrez and getting his side of the story and to his credit, he also quickly responded to my questions every time I e-mailed him. I gave him the benefit of the doubt.
Business ( Article MRec ), pagematch: 1, sectionmatch: 1
But apparently, I was not the only one he was stringing along. He was doing the exact same thing to P-Noy. Unfortunately for him, P-Noy had the power to fire him after he failed to deliver on his promises. To P-Noy’s credit, he took the difficult task of firing a family friend for non performance.
So now we have a new CAAP director-general in Gen. William Hotchkiss, a former commanding general of the Air Force. General Hotchkiss is known for his tough management style and hopefully we finally have the right man.
I talked to him during the PAL launch last Monday and he seemed pretty sure that we will get that upgrade soon but wouldn’t promise a date. I have my doubts but again, I will take his word for it… for now.
He said they are feverishly working on it, keeping 12 hour days in the office in their attempt to satisfy the FAA. He refused to say more about it beyond letting me know that they will make a status report to P-Noy in two weeks.
Since he wouldn’t talk about it anymore, we ended up reminiscing about the Blue Diamonds of the Air Force. The general and his Deputy Director General at CAAP, John Andrews, are Blue Diamond veterans.
The Blue Diamonds, to update our younger generation, is Philippine Aviation at its best. Once upon a time, we had enough fighter planes in the Air Force to have an aerobatic team that flies in formation during important national celebrations.
It is almost unfair our young people are being deprived the thrill of seeing the Blue Diamonds display their stunts and fly low at the Luneta as part of the traditional civic-military parade during Independence Day. Those were the days when our Air Force was one of the best in the region.
Unfortunately, as with everything else that got neglected by the Marcos dictatorship and the succeeding administrations, our Air Force deteriorated and the Blue Diamonds are now just a memory. Gen Hotchkiss and I can only shake our heads in regret.
That is also the story of how our aviation sector was downgraded to Category 2: the ATO and even the CAAP became infested with bureaucratic vermin. They allowed PAL to ignore its bills (landing fees, etc) amounting to billions of pesos. We need technically qualified people at CAAP and its rules must be responsive to its needs and responsibilities.
A veteran newsman covering the aviation sector for decades told me during the same PAL cocktails that it may take as long as three years for us to convince the FAA and ICAO we have mended our rotten ways. So as we watched an audio visual presentation flashed on the giant screen announcing the new Boeing 777s and the plans to fly to more US cities, Europe and the Middle East, we concluded Ramon Ang is dreaming.
We need dreamers like Ramon Ang but we also need government officials who will do what they must to make those dreams come true. Those 777s cannot fly to the US and Europe any time soon. Lucky for RSA that Canada is allowing the use of those long range aircrafts to fly to Vancouver and Toronto. New York may be near enough from Toronto but still quite far without the Cat 1 upgrade.
I am told by sources that FAA’s beef is the way CAAP is struggling to provide qualified check pilots, mechanics, air traffic controllers and updated airport technology to ensure safety. Mar Roxas has sat on a proposal to provide a modern Communication, Navigation and Surveillance/Air Traffic Management (CNS/ATM) system for our prime gateway airport and for the country.
Mar suspects, likely for good reason, that corruption tainted the purchase of that facility through JICA during Ate Glue’s watch. But studying it for a year is a bit much. He has to move on with a solution of his own by now. Besides, I am told most of the equipment has been delivered waiting to be put into action.
Indeed, infrastructure hasn’t kept pace with the growth of the Philippine aviation industry so that there is a serious congestion at NAIA now while many provincial airports are ill-equipped and without facilities for night operations. It is such that local airlines that invested billions on aircraft purchases and leases are now being punished with curtailed flights.
Sure, we have done a lot of things by now to modernize operations of CAAP but it still seems that the measures we have taken are stop-gap in nature. FAA is looking for sustainability.
For example, we have hired retired pilots of PAL to perform the role of check pilots. Because the pay of pilots are way above what government officials get, we were unable to get licensed check pilots until these retired pilots agreed to do one for their country with little regard for the salary.
That may seem OK for now but the FAA wants a game plan for the future. That goes too for air traffic controllers and inspectors. P-Noy must find a way to upgrade salaries further for these technical personnel so that more young people will find it worthwhile to train to serve in these functions and not leave for better pay abroad. That’s how to convince FAA that this time we are serious.
The stakes are high in terms of dollars and cents for Philippine carriers and more importantly in terms of national pride. P-Noy must have a single-minded, all hands on deck focus on getting that Category 1 upgrade within his term, preferably in the next year.
Otherwise, the only recourse of our airlines is to wet lease (including crew) aircraft registered in the US and Europe. But that cannot be done under the present Philippine law, one other reason FAA is withholding an upgrade. I understand CAAP has asked Congress to revise Republic Act 9497 to allow such leases by local carriers in the country.
PAL used to fly US-and European-registered airplanes, which the airline rented, and which were allowed under the now-defunct Air Transportation Office (ATO), before the creation of CAAP. I know this demand of the FAA sounds like a commercial strong arm tactic but it is also the only way we can get our upgrade quicker.
Or maybe, PAL can register its new planes abroad, instead.
The question is: Can P-Noy deliver a Cat 1 upgrade? I hope so.
BTW… I was told Mar Roxas doesn’t have the guts to move the corporate jets out of NAIA and into Sangley to relieve congestion. Maybe P-Noy, who got rid of the wang wang, can show him how to have the balls to deal with big shots.
Air traffic talk
Lady Radar Controller: “Can I turn you on at seven miles?”
Airline Captain: “Madam, you can try.”
July 27, 2012
DEMAND AND SUPPLY By Boo Chanco
It was a grand launch by Philippine Airlines last Monday of their new planes, new in-flight cuisine and new flight attendants. It is new management after all, led by San Miguel’s Ramon Ang, and you can feel they are raring to go.
Except for one thing… one big thing… we are still mired for almost five years now in the ignominy of a Category 2 downgrade by the US Federal Aviation Administration (FAA) based on technical reviews. Two other foreign aviation regulatory entities aside from the FAA have downgraded us: the EU and the ICAO or the International Civil Aviation Organization.
What these agencies are saying is that our country’s aviation regulatory set-up is highly deficient or unsafe. It is so unsafe that the Europeans who come here as tourists and ride Philippine-registered aircrafts do so at their own risk. Their insurance will not cover those rides on PAL, Cebu Pacific, Zest, SEAir, etc.
Well… what can we say? Philippine aviation used to be regulated by the Air Transportation Office. Congress quickly passed the bill establishing CAAP or the Civil Aviation Authority of the Philippines after the downgrade during the watch of Ate Glue. CAAP was supposed to be a more autonomous authority that will improve the situation.
But nothing has so far convinced the FAA and ICAO and the Europeans that we deserve a restoration to Category 1. It wasn’t surprising we got nowhere during the watch of Ate Glue. Her DOTC Secretary then, a former police officer, was more interested in other things like the ZTE deal.
When P-Noy took over, he appointed the Aquino family pilot to head CAAP even when industry murmurs indicated he didn’t have the necessary managerial skills for such a critical mission. I took the pains of listening to Ramon Gutierrez and getting his side of the story and to his credit, he also quickly responded to my questions every time I e-mailed him. I gave him the benefit of the doubt.
Business ( Article MRec ), pagematch: 1, sectionmatch: 1
But apparently, I was not the only one he was stringing along. He was doing the exact same thing to P-Noy. Unfortunately for him, P-Noy had the power to fire him after he failed to deliver on his promises. To P-Noy’s credit, he took the difficult task of firing a family friend for non performance.
So now we have a new CAAP director-general in Gen. William Hotchkiss, a former commanding general of the Air Force. General Hotchkiss is known for his tough management style and hopefully we finally have the right man.
I talked to him during the PAL launch last Monday and he seemed pretty sure that we will get that upgrade soon but wouldn’t promise a date. I have my doubts but again, I will take his word for it… for now.
He said they are feverishly working on it, keeping 12 hour days in the office in their attempt to satisfy the FAA. He refused to say more about it beyond letting me know that they will make a status report to P-Noy in two weeks.
Since he wouldn’t talk about it anymore, we ended up reminiscing about the Blue Diamonds of the Air Force. The general and his Deputy Director General at CAAP, John Andrews, are Blue Diamond veterans.
The Blue Diamonds, to update our younger generation, is Philippine Aviation at its best. Once upon a time, we had enough fighter planes in the Air Force to have an aerobatic team that flies in formation during important national celebrations.
It is almost unfair our young people are being deprived the thrill of seeing the Blue Diamonds display their stunts and fly low at the Luneta as part of the traditional civic-military parade during Independence Day. Those were the days when our Air Force was one of the best in the region.
Unfortunately, as with everything else that got neglected by the Marcos dictatorship and the succeeding administrations, our Air Force deteriorated and the Blue Diamonds are now just a memory. Gen Hotchkiss and I can only shake our heads in regret.
That is also the story of how our aviation sector was downgraded to Category 2: the ATO and even the CAAP became infested with bureaucratic vermin. They allowed PAL to ignore its bills (landing fees, etc) amounting to billions of pesos. We need technically qualified people at CAAP and its rules must be responsive to its needs and responsibilities.
A veteran newsman covering the aviation sector for decades told me during the same PAL cocktails that it may take as long as three years for us to convince the FAA and ICAO we have mended our rotten ways. So as we watched an audio visual presentation flashed on the giant screen announcing the new Boeing 777s and the plans to fly to more US cities, Europe and the Middle East, we concluded Ramon Ang is dreaming.
We need dreamers like Ramon Ang but we also need government officials who will do what they must to make those dreams come true. Those 777s cannot fly to the US and Europe any time soon. Lucky for RSA that Canada is allowing the use of those long range aircrafts to fly to Vancouver and Toronto. New York may be near enough from Toronto but still quite far without the Cat 1 upgrade.
I am told by sources that FAA’s beef is the way CAAP is struggling to provide qualified check pilots, mechanics, air traffic controllers and updated airport technology to ensure safety. Mar Roxas has sat on a proposal to provide a modern Communication, Navigation and Surveillance/Air Traffic Management (CNS/ATM) system for our prime gateway airport and for the country.
Mar suspects, likely for good reason, that corruption tainted the purchase of that facility through JICA during Ate Glue’s watch. But studying it for a year is a bit much. He has to move on with a solution of his own by now. Besides, I am told most of the equipment has been delivered waiting to be put into action.
Indeed, infrastructure hasn’t kept pace with the growth of the Philippine aviation industry so that there is a serious congestion at NAIA now while many provincial airports are ill-equipped and without facilities for night operations. It is such that local airlines that invested billions on aircraft purchases and leases are now being punished with curtailed flights.
Sure, we have done a lot of things by now to modernize operations of CAAP but it still seems that the measures we have taken are stop-gap in nature. FAA is looking for sustainability.
For example, we have hired retired pilots of PAL to perform the role of check pilots. Because the pay of pilots are way above what government officials get, we were unable to get licensed check pilots until these retired pilots agreed to do one for their country with little regard for the salary.
That may seem OK for now but the FAA wants a game plan for the future. That goes too for air traffic controllers and inspectors. P-Noy must find a way to upgrade salaries further for these technical personnel so that more young people will find it worthwhile to train to serve in these functions and not leave for better pay abroad. That’s how to convince FAA that this time we are serious.
The stakes are high in terms of dollars and cents for Philippine carriers and more importantly in terms of national pride. P-Noy must have a single-minded, all hands on deck focus on getting that Category 1 upgrade within his term, preferably in the next year.
Otherwise, the only recourse of our airlines is to wet lease (including crew) aircraft registered in the US and Europe. But that cannot be done under the present Philippine law, one other reason FAA is withholding an upgrade. I understand CAAP has asked Congress to revise Republic Act 9497 to allow such leases by local carriers in the country.
PAL used to fly US-and European-registered airplanes, which the airline rented, and which were allowed under the now-defunct Air Transportation Office (ATO), before the creation of CAAP. I know this demand of the FAA sounds like a commercial strong arm tactic but it is also the only way we can get our upgrade quicker.
Or maybe, PAL can register its new planes abroad, instead.
The question is: Can P-Noy deliver a Cat 1 upgrade? I hope so.
BTW… I was told Mar Roxas doesn’t have the guts to move the corporate jets out of NAIA and into Sangley to relieve congestion. Maybe P-Noy, who got rid of the wang wang, can show him how to have the balls to deal with big shots.
Air traffic talk
Lady Radar Controller: “Can I turn you on at seven miles?”
Airline Captain: “Madam, you can try.”
Sunday, July 22, 2012
Korean Airline Swings to Loss
Carrier Expects Current Period to Be Aided by Stronger Won, Stabilizing Jet-Fuel Prices
Kyong-Ae Choi
The Wall Street Journal
Friday-Sunday
July 20-22,2012
SEOUL-Korean Air Lines Co. said on Thursday that rising passenger traffic, stabilizing oil prices and a rebounding Korean won will help it post a profit in the third quarter after the national flag carrier swung to a loss in the second quarter.
Outbound traffic from South Korea is expected to rise while inbound and transit demand remains strong, a company spokesman said. Cargo shipments are expected to recover gradually due to seasonal demand and the coming London Olympics, he added.
As jet fuel accounts for 40% of Korean Air's overall costs, a sustained decline in oil prices is likely to be the biggest catalyst to help the airline return to the black in the current quarter, analyst said. In addition, given that much of its business is transcasted in the local currency while debts are denominated in dollars, a strengthening of the won against the dollar will also bolster earnings, they said.
Despite a decline in jet-fuel prices, expenses for the fuel rose 3.1% on year to 11.981 trillion Korean won ($10.5 billion) in the second quarter as the airline scheduled more flights. Jet-fuel prices fell 2% to an average of $136.3 a year earlier.
For the three months ended June 30, Korean Air swung to a consilidated net loss of 158.5 billion won from a net profit of 21.15 billion won a year earlier due to the weak local currency and higher fuel expenses.
"A weaker won drove up the value of dollar-denominated debts which left the company with foriegn exchange translation losses worth 136 billion won," the spokesman said. Such debts increased 12% to $12.34 billion as of the end of June.
In contrast, Korean Air reported Foreign-exchange gains worth 165 billion won in the year-earlier period.
The dollar had strengthened to 1,153.80 won at the end of June from 1,078.10 won a year earlier. The greenback was trading at about 1,139.10 won on Thursday.
The airline recorded a loss of 48 billion won in the June quarter relating to the firm's affiliates, compared with a profit of 39 billion won a year earlier.
At the operating level, the carrier swung to a profit of 128.48 billion won in the second quarter from an operating loss of 19.73 billion won a year earlier. Sales rose 11% to 3.272 trillion won from 2.944 trillion won.
Increased outbound demand on long-haul routes to Europe and the U.S. helped buoy the second-quarter operating profit, the Korean Air spokesman said.
Still, amid global economic uncertainties outbound shipments of technology products and auto parts fell for Korean Air, which is the world's second-largest cargo carrier by freight volume.
Meanwhile, Korean Air on Thursday disclosed it will purchase two B777-300ER passenger jets for $558 million from Boeing Co. to strengthen its services on long-haul routes. The airline expects to complete the jetliner purchases by 2014.
Separately, Canada's Competition Bureau said on Thursday that Korean Air pleaded guilty and has been fined about $5.4 million for its participation in an air-cargo price-fixing cartel between 2002 and 2006. The investigation has now yielded a total of seven convictions.
Kyong-Ae Choi
The Wall Street Journal
Friday-Sunday
July 20-22,2012
SEOUL-Korean Air Lines Co. said on Thursday that rising passenger traffic, stabilizing oil prices and a rebounding Korean won will help it post a profit in the third quarter after the national flag carrier swung to a loss in the second quarter.
Outbound traffic from South Korea is expected to rise while inbound and transit demand remains strong, a company spokesman said. Cargo shipments are expected to recover gradually due to seasonal demand and the coming London Olympics, he added.
As jet fuel accounts for 40% of Korean Air's overall costs, a sustained decline in oil prices is likely to be the biggest catalyst to help the airline return to the black in the current quarter, analyst said. In addition, given that much of its business is transcasted in the local currency while debts are denominated in dollars, a strengthening of the won against the dollar will also bolster earnings, they said.
Despite a decline in jet-fuel prices, expenses for the fuel rose 3.1% on year to 11.981 trillion Korean won ($10.5 billion) in the second quarter as the airline scheduled more flights. Jet-fuel prices fell 2% to an average of $136.3 a year earlier.
For the three months ended June 30, Korean Air swung to a consilidated net loss of 158.5 billion won from a net profit of 21.15 billion won a year earlier due to the weak local currency and higher fuel expenses.
"A weaker won drove up the value of dollar-denominated debts which left the company with foriegn exchange translation losses worth 136 billion won," the spokesman said. Such debts increased 12% to $12.34 billion as of the end of June.
In contrast, Korean Air reported Foreign-exchange gains worth 165 billion won in the year-earlier period.
The dollar had strengthened to 1,153.80 won at the end of June from 1,078.10 won a year earlier. The greenback was trading at about 1,139.10 won on Thursday.
The airline recorded a loss of 48 billion won in the June quarter relating to the firm's affiliates, compared with a profit of 39 billion won a year earlier.
At the operating level, the carrier swung to a profit of 128.48 billion won in the second quarter from an operating loss of 19.73 billion won a year earlier. Sales rose 11% to 3.272 trillion won from 2.944 trillion won.
Increased outbound demand on long-haul routes to Europe and the U.S. helped buoy the second-quarter operating profit, the Korean Air spokesman said.
Still, amid global economic uncertainties outbound shipments of technology products and auto parts fell for Korean Air, which is the world's second-largest cargo carrier by freight volume.
Meanwhile, Korean Air on Thursday disclosed it will purchase two B777-300ER passenger jets for $558 million from Boeing Co. to strengthen its services on long-haul routes. The airline expects to complete the jetliner purchases by 2014.
Separately, Canada's Competition Bureau said on Thursday that Korean Air pleaded guilty and has been fined about $5.4 million for its participation in an air-cargo price-fixing cartel between 2002 and 2006. The investigation has now yielded a total of seven convictions.
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