Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
T'way Air sole carrier to suffer loss in Q3
T'way Air's aircraft is seen in this undated file photo captured from the air carrier's homepage. Yonhap
By Lee Min-hyung
T'way Air CEO Jeong Hong-geun / Korea Times file
T’way Air reported a third-quarter operating loss of 7.1 billion won ($5.1 million), Wednesday, due to excessive spending on expanding its European routes, making it the only local low-cost carrier (LCC) to incur a loss during the period.
T’way’s third-quarter cost of sales came in at 363.4 billion won, up 28.7 percent from a year earlier. Despite the sales growth, the airline reported an operating loss of 2.2 billion won compared to the previous quarter.
T’way’s operating loss is attributed to the launch of its first-ever European routes, as part of a precondition for Korean Air’s transfer of four European routes to T’way.
The European Commission granted partial approval for Korean Air’s takeover of Asiana Airlines on the condition that four aviation routes from Incheon to Frankfurt, Paris, Rome and Barcelona be transferred to T’way.
“T’way is not ready to operate stable European routes, which may have led the airline to engage in aggressive spending,” an official from a local LCC said.
The LCC’s operating loss is in contrast to those of other rival LCCs — such as Jeju Air, Jin Air and Air Busan — all of which reported solid operating profits exceeding 30 billion won.
T’way is widely expected to extend its losing streak into the fourth quarter, as the final quarter is traditionally an off-season for most carriers. A high won-dollar exchange rate also comes as a major risk to the airlines' profitability.
Korean Air also reported a robust operating profit of 618.6 billion won, up 19 percent from a year ago. Asiana Airlines achieved an operating profit of 128.9 billion won, up 1.7 percent during the same period.