Weak Won Wreak Havoc on Airlines, Refineries
By Kim Yoo-chul
Staff Reporter
Leading airliners and oil refiners are having serious difficulties, hit by the won's fall against the greenback.
``We are in an emergency to offset mounting losses from the weaker won in the wake of surging prices for imported raw materials,'' a source from the nation's No. 1 carrier Korean Air told The Korea Times, Tuesday.
``The operating losses in the third quarter will surely rise,'' said the official without elaborating further. Industry watchers say the national carrier loses some 25 billion won in profits whenever the won weakens against the dollar by 10 won.
Korean Air suffered 288.9 billion won in losses in the latest quarter mainly because of the weakening won and rising oil prices.
``We could not calculate possible losses amid high volatility on the won's move. Most of our staff members are in frequent emergency meetings,'' said an official from S-Oil. Whenever the won loses 10 won against the dollar, the oil refiner suffers a maximum 80 billion won in losses as they import oil on a U.S. dollar basis.
GS Caltex is estimated to have lost 100 billion won in the first half because of the weaker won.
Food makers are also burdened with rising materials costs, pushing them to increase the price of noodles, snacks and other products.
POSCO also added unfavorable foreign exchange movement is straining their bottom line.
IT giants such as Samsung Electronics and LG Electronics are having difficulty setting up detailed management plans for next year due to the deepening global economic downturn.
``We are concerned over the rising prices of imported raw materials and weaker demand for electronic gadgets,'' a Samsung Electronics spokesman said.