Korean Air, Asiana to suspend some domestic cargo ops

Asiana Airlines (OZ, Seoul Incheon) and Korean Air (KE, Seoul Incheon) said they would suspend some domestic cargo services in October. The news came after the two carriers swung to operating losses for the April-to-June quarter, hit by challenges such as the US-China trade war slowing cargo demand, intensifying competition from LCCs, and a spat with Japan that is hurting travel.

Korean Air will cease the sales, transportation, and operation of its terminals at Cheongju, Daegu, and Gwangju on October 1, it said on its cargo website, with an airline official telling the broadcaster KBS News: "The cumulative sustained deficit made it inevitable."

Asiana also posted a notice on its cargo homepage, saying it would stop domestic cargo transportation from the same three airports from October 1.

"The decision was made to better curb the deficit. From October, we will only operate cargo services on the Seoul Gimpo-Jeju route," an Asiana official said.

Daegu saw domestic cargo throughput reach 15,889 tons in 2018, down 8.3% from the previous year, while domestic cargo in Cheongju declined 13.6% to 14,446 tons, according to KBS.

Korean Air's cargo revenues fell 9.6% in the first half of 2019, to KRW1.27 trillion won (USD1.05 billion). Domestic cargo accounts for just 1% of the carrier's total cargo performance, but sales in the segment fell by 12% during the same period.

Overall, Korean and Asiana sustained a combined KRW100 billion won (USD82.5 million) in operating losses for the second quarter.

In related news, the South Korean activist fund KCGI, the second-largest shareholder in Korean Air's parent company Hanjin Group, is interested in buying a controlling stake in Asiana, the fund's chief executive Kang Sung-boo has told Reuters.

He said that the fund was negotiating with domestic and overseas entities to create a consortium to bid for a 31.05% stake put up for sale by shareholder Kumho Industrial, estimated to be worth USD282 million. Asiana expects initial bids on September 3 and binding bids in October, according to Kang.