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kaichinshih
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Posts: 531
Joined: Sun May 24, 2009 9:51 am

The Odd Ones: CI & KE Expecting Q2 2020 Profits

Fri Jun 12, 2020 4:40 pm

Korean Air and Taiwan's China Airlines are both expected to turn at least an operational profit for Q2 2020. Various factors are at play, but major ones include skyrocketing freight rates, low oil prices, recovering domestic market, and (unfortunate) staff pay-cuts/ furloughs.

China Airlines:
    Cargo revenues took over pax revenue for the first time in April and reached an incredible 151% YoY growth in May, offsetting overall revenue decline to roughly a quarter. CI mgmt. told local media that profits from May alone is higher than a half year profit from 2019. CI also benefits from less restricted access to Mainland China; the "five one" policy that led to the US-China FAA spat doesn't apply to Taiwanese carriers.

Korean Air:
    No monthly cargo figures but, according to Pulse News, investment firms are estimating an operating profit of 72m USD for KE in Q2. Demand for medical and chip supplies has been high and “[freight rate] levels are already 20 to 30 percent higher than the previous peaks in its heyday between 2010 and 2017". KE saw a 3.1% YoY increase in RFTK for Q1 2020.

It's possible that May marks the peak of this cargo growth. With airlines gradually restarting services, increase in belly space supply will push AFTK back up and lower rates. Nonetheless, amazing how much cargo helped CI and KE during this difficult period.

Any other airlines expected to better weather the storm during this period? Hopefully those with sizable freighter fleets (e.g. CX, LH, QR) can at least see smaller losses.

=======================================================
Source:
China Airlines: https://ctee.com.tw/news/industry/281843.html
Korean Air: https://pulsenews.co.kr/view.php?year=2020&no=572760
 
Ishrion
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Re: The Odd Ones: CI & KE Expecting Q2 2020 Profits

Fri Jun 12, 2020 4:53 pm

Maybe Korean Air is the undisclosed 777X/787/777F customer :spin:

But seriously, great to see some airlines doing well.
 
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kaichinshih
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Posts: 531
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Re: The Odd Ones: CI & KE Expecting Q2 2020 Profits

Sat Jun 13, 2020 5:13 am

Ishrion wrote:
Maybe Korean Air is the undisclosed 777X/787/777F customer :spin:

But seriously, great to see some airlines doing well.


Exactly. To think that Korean Air was "fighting for survival" earlier this year. Now they're one of better ones!
 
raylee67
Posts: 915
Joined: Mon Oct 24, 2011 11:06 pm

Re: The Odd Ones: CI & KE Expecting Q2 2020 Profits

Sat Jun 13, 2020 5:28 am

Both KE and CI have a large cargo fleet compare with its pax fleet.
KE is 143:23 (14% of fleet is cargo plane)
CI is 70:18 (20% of fleet is cargo plane)

Other airlines which is better position to capture the cargo market (e.g. CX, BR, NH, SQ, etc.) have a much smaller cargo fleet
CX/KA is 180:20 (10%)
BR is 79:5 (8%)
NH and SQ cargo fleet is even smaller (as a proportion to the whole fleet)

While these airlines can convert pax planes temporarily to carry cargo, it is not efficient and they have far more staff who is catered to pax traffic (e.g. ground crew, FAs) that they need to handle.

Also, although Korea and Taiwan have both got the pandemic under control, their domestic markets are negligible, so I doubt how much their domestic pax recovery is contributing to this positive result. Taiwan has closed itself off from international pax traffic. No non-Taiwanese can enter. No transit pax. Korea requires all international arrivals (regardless of where you come from) to take a 14-day quarantine either at a reported hotel (for foreigners) or at home (for Koreans) so it is most likely that pax traffic would be almost nil, although I think ICN still allows international connection.
319/20/21 332/33 342/43/45 359/51 388 707 717 732/36/3G/38/39 74R/42/43/44/4E/48 757 762/63 772/7L/73/7W 788/89 D10 M80 135/40/45 175/90 DH1/4 CRJ/R7 L10
AY LH OU SR BA FI LX
AA DL UA NW AC CP WS FL NK PD
CI NH SQ KA CX JL BR OZ TG KE CA CZ NZ JQ RS
 
Tankdiver
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Re: The Odd Ones: CI & KE Expecting Q2 2020 Profits

Sat Jun 13, 2020 7:43 am

I work with CI at LAX. Their cargo traffic is just crazy the past two months. There were days when they have five B747F flights along with six flights of mix B777-300ER and A350-900 used for cargo. All my time working at LAX, I have never seen three CI B747-400F parked next to each other at the ICC cargo area and three B777-300ER parked side by side at TBIT. It was quite a sight!

Three China Airlines B747-400F at ICC cargo complex
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Three China Airlines B777-300ER parked next to each other at TBIT....in sequential tail number too! B18001, B18002, B18003

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China Airlines B777-300ER and A350-900 at the remote gate area

Image

Korean Airlines were also very busy. Today I counted at least seven KE aircraft arriving and departing. There were B747-400F, B747-8F, B777F, B777-300ER, and B787-9

Here is a KE B777F and a B777-300ER at their cargo facility
Image

A KE B787-9 and a B747-8F
Image

Mean while over at TBIT, they have their B777-300ER and B787-9

Image
 
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Antaras
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Re: The Odd Ones: CI & KE Expecting Q2 2020 Profits

Sat Jun 13, 2020 8:53 am

Guessing the same things with Vietnamese carriers. Their domestic network is fully recovered, int'l ops is being planned.
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AngMoh
Posts: 1059
Joined: Fri Nov 04, 2011 5:03 am

Re: The Odd Ones: CI & KE Expecting Q2 2020 Profits

Sat Jun 13, 2020 10:09 am

kaichinshih wrote:
Korean Air and Taiwan's China Airlines are both expected to turn at least an operational profit for Q2 2020. Various factors are at play, but major ones include skyrocketing freight rates, low oil prices, recovering domestic market, and (unfortunate) staff pay-cuts/ furloughs.
...
Any other airlines expected to better weather the storm during this period? Hopefully those with sizable freighter fleets (e.g. CX, LH, QR) can at least see smaller losses.

=======================================================
Source:
China Airlines: https://ctee.com.tw/news/industry/281843.html
Korean Air: https://pulsenews.co.kr/view.php?year=2020&no=572760


I don't believe it and the articles seem to indicate that they are talking about the Cargo Business and not the airline as whole. The China Airlines article definitely talks about cargo business only and while the KE is less clear, further down it also talks about cargo business profitability and not overall profitability. There is absolutely no way in the world that KE with 50% of revenue coming from passengers and 27% revenue from cargo is going to be profitable when there is a 98% drop in outbound international passengers. CI is in Taiwan which closed its borders to all non-residents. No way they are going to be profitable when 80% of their fleet is Pax.

Cargo is definitely helping a lot: SQ has gone from 134 planes parked to 98% parked by using A350s and 787-10s for freight. But that is way short to become profitable..... It just reduces the bleeding.
727 732 733 734 735 73G 738 739/ER 742 743 744/M 752 753 762 772 77E 773 77W 788 A300 A310 A319 A320 A321 A332 A333 A343 A345 A346 A359 A35K A388 DC-9 DC-10 MD11 MD81 MD82 MD87 F70 ERJ145 E170 E175 E190 E195 ATR72 Q400 CRJ200 CRJ700 CRJ900 BAE146 RJ85

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