Korean Air Predicts ‘Hard, Tough Year’ for Air-Freight Market
Korean Air Predicts ‘Hard, Tough Year’ for Air-Freight Market
By Susanna Ray
February 06, 2012 10:46 PM EST
Korean Air Lines Co., the world’s second-largest international freight carrier, expects a cargo slump to continue as economic concerns stymie world trade.
“We’re looking for a hard, tough year,” Walter Cho, senior vice president of corporate strategy and planning, said yesterday in Seattle. He spoke after the carrier received two new Boeing Co. (BA) freighters — a 747-8 and a 777.
Global international cargo volumes fell for an eighth straight month in December, according to the International Air Transport Association, as Europe’s debt crisis and U.S. unemployment above 8 percent damps demand for Asian-made goods. The cargo slowdown probably contributed to Asia- Pacific carriers’ profit falling 69 percent last year, according to a forecast by the airline group.
Korean Air plans to use the 747-8, Boeing’s biggest freighter, on long-haul routes, such as to the U.S., Cho said. The carrier expects to receive one more this year. In total, the airline has ordered seven 747-8 freighters and five 777 cargo planes for delivery through 2018.
“I thought it was a good time to expand, because everybody else is shrinking,” Cho told reporters. “We’re looking at the long-term picture.”
The carrier is also due to receive its sixth Airbus SAS A380 passenger plane this year. The airline hasn’t seen any drop in bookings for flights on the superjumbo since cracks were discovered in the wings of other A380 operators’ planes, Cho said.
Korean Air, which has ordered Bombardier Inc.’s new CSeries jet, is also looking at new narrow-body planes, he said. The carrier will consider revamped versions of Airbus’s A320 and Boeing’s 737, which feature new engines.
747-8 Fuel Burn
Cho also said that he thought Boeing and engine-maker General Electric Co. would be able to resolve a fuel- performance shortfall with the 747-8 by the end of the year. A fuel-burn dispute with the GEnx engines was cited by maiden customer Cargolux International SA and Atlas Air Worldwide Holdings Inc. late last year in deferring or rejecting some planes on order.
“It’s not much,” Cho said of the performance shortfall. “It’s easily doable for GE.”
GE Aviation has said its performance improvement package will be ready in mid to late 2013. The 747-8 entered service in November after a two-year delay.
To contact the reporter on this story: Susanna Ray in Seattle at sray7@bloomberg.net
To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net.