Asiana credit rating up on financial soundness

By Lee Hyo-sik

Korea’s three major credit rating agencies have elevated credit worthiness of Asiana Airlines by one notch to BBB+ from BBB, citing its improving financial soundness amid growing air travel demand.

Asiana said Tuesday that the three ratings agencies, NICE, Korea Ratings and Korea Investors Service, upgraded the status of the airline’s corporate bond, making it cheaper for the firm to raise capital when issuing notes.

BBB+ is the highest credit level that the company has received since the 1997-98 Asian Financial crisis. Its corporate rating was raised to BBB- from BB+ in January 2005. In June 2007, it was again upgraded to BBB.

``The latest ratings hike, the first in four years, reflects our improved bottom line over the past year in the wake of surging air travel demand. Additionally, our efforts to cut costs and boost the company’s financial standing was recognized by ratings agencies,’’ an Asiana Airlines spokesman said.

In 2010, Asiana achieved its most impressive performance since its foundation in 1988 as a result of the economic rebound, as well as the stabilized foreign exchange rate and global oil prices. It earned 5.07 trillion won in revenue, while posting 612 billion won in operating profit and 219 billion won in net profit.

In the first quarter of 2011, the airline recorded revenue of 1.26 trillion won, up 7.1 percent from a year earlier, with an operating profit of 98.4 billion won.

`The company-wide efforts to reduce fuel costs and the expansion of the mid-distance routes connecting Korea with destinations in China and Japan have helped us receive higher credit ratings. Additionally, the sale of our 19-percent stake in Korea Express is expected to further boost our bottom line when the deal is completed,’’ the spokesman said.