Korean Airlines 2010 2Q Results · RPK(Mil) Yield(KRW) 11 Passenger Traffic & Yield Changes Historically the highest traffic level in all 2nd quarters Continuous traffic growth since

2010 2Q Results

2010. 8. 13

Korean Airlines

1

Disclaimer

2

This presentation is for informational purposes only, contains preliminary financial and

other information about Korean Air Lines Co., Ltd. and is subject to updating, revision,

amendment and completion. This presentation does not and is not intended to constitute or

contain any offer of securities for sale or a solicitation of an offer to purchase any securities of

Korean Air Lines Co., Ltd. or any other company and neither this presentation nor anything

contained herein shall form the basis of any contract or commitment.

Certain statements contained in this presentation may be statements of future expectations

and other forward-looking statements or trend information that are based on management's

current views and assumptions and involve known and unknown risks and uncertainties that

could cause actual results, performance or events to differ materially from those in the

forward-looking statements in this presentation. In addition to statements which are forward-

looking by reason of context, including without limitation, statements referring to risk

limitations, operational profitability, financial strength, performance targets, profitable

growth opportunities, and risk adequate pricing, the words "may, will, should, expects, plans,

intends, anticipates, believes, estimates, predicts, or continue", "potential, future, or further",

and similar expressions are intended to identify forward-looking statements. Korean Air Lines

Co., Ltd. assumes no obligation to update or revise any such statements or any other

information contained herein to reflect events or circumstances that may arise after the date

of this presentation c

3

Summarized Balance Sheet

(Unit : Billion KRW)

End of

2010 2Q

End of

2009

Changes

Amount Ratio

Asset

Current Asset 2,627.9 2,496.1 131.8 5.3%

Non-Current Asset 14,916.0 14,423.2 492.8 3.4%

Total Asset 17,543.9 16,919.3 624.6 3.7%

Liabilities

Current Liabilities 5,729.5 4,614.9 1,114.6 24.2%

Non-Current Liabilities 8,843.6 9,247.3 (403.7) -4.4%

Total Liabilities 14,573.1 13,862.2 710.9 5.1%

Total Shareholder’s Equity 2,970.8 3,057.1 (86.3) -2.8%

4

Asset Composition

0

2,000

4,000

6,000

8,000

10,000

12,000

Quick

Asset

Inventories Investments Tangibles Non

Tangibles

Others

End of 2010 2Q

End of 2009


Increased

163.2 billion KRW

Increased

449.7 billion KRW

Current Assets Non-Current Assets

Borrowings

5

Currency

End of

2010 2Q

End of

2009Changes

Local Weight Local Weight Amount Ratio

USD $ 5.22 bil 53.7% $ 5.03 bil 50.1% 0.19 bil 3.8%

KRW ₩ 5,034.1 bil 42.8% ₩5,375.4 bil 45.9% -341.3 bil -6.4%

JPY ￥ 23.8 bil 2.8% ￥ 27.8 bil 3.0% -4.0 bil -14.4%

EUR € 0.06 bil 0.7% € 0.07 bil 1.0% -0.01 bil -14.3%

Total

(in USD)9.72 bil 100% 9.87 bil 100% -0.15 bil -1.5%

※ Applied USD/KRW FX rate : ₩1,210.30 (as end of 2010 2Q)

6

Borrowings (Changes YOY)

0

1

2

3

4

5

6

USD KRW JPY EUR

5.22

4.16

0.27 0.07

5.03

4.44

0.310.08

End of 2010 2Q

End of 2009

(Unit : Billion USD)Decreased

341.3 billion KRW

■ Total borrowing amount decreased by 0.15 billon USD

7

Summarized Income Statement

2010

2Q

2009

2QChanges

2010

1H

2009

1HChanges

Operating

Revenue2,836.4 2,074.5 36.7% 5,435.4 4,338.9 25.3%

Operating

Expense2,484.3 2,201.8 12.8% 4,863.1 4,459.6 9.0%

Operating

Profit352.1 (127.3)

Turn to

Profit572.3 (120.7)

Turn to

Profit

Non Operating

Income/Expense(650.4) 221.1 (637.4) (459.4)

Income

Before Tax(298.3) 93.8 (65.1) (580.1)

Net Income (233.1) 78.5 (61.5) (447.8)


Aerospace78%

Catering13%

Hotel/Limousine

9%

8

Revenue Breakdown

■ Posted an Operating revenue of 2,836.4 billion KRW in 2Q

■ Increased 36.7% compared to the same period last year (Historically the highest figure)

Dom Passenger

5%

Int’l Passenger

47%

Cargo36%

Flight Operation

Related8%

OtherBusinesses

4%

Total Revenue Flight Operation Related

Other Businesses

In-flight Duty free

24%

Mileage25%

OAL Maintenance

10%

Baggage3%

Agreement Operation

1%

Others37%

9

Operating Profit

■ Passenger : Increased 25.8% (YOY)

■ Cargo : Increased 86.4% (YOY)

- Stable FX rate and resume of travel demand were the main drivers

- Traffic increased due to economy recovery

109

(4%) 100

(5%)

221

(8%)

245

(12%)

1,020

(36%)

547

(26%)

1,486

(52%) 1,181

(57%)


2009 2Q : 2,075 bil KRW2010 2Q : 2,836 bil KRW

Passenger

Increased

305 billion

KRW(YOY)

Cargo

Increased

473 billion

KRW(YOY)

10

Changes Changes

Supply(mil ASK) 1,105 1,126 -1.9% 18,104 18,274 -0.9%

APR 372 369 0.8% 5,868 5,999 -2.2%

MAY 386 389 -0.8% 6,226 6,214 0.2%

JUN 347 368 -5.7% 6,011 6,062 -0.8%

Traffic(mil RPK) 788 737 6.9% 13,858 12,123 14.3%

APR 273 261 4.6% 4,419 3,956 11.7%

MAY 284 262 8.4% 4,719 4,025 17.2%

JUN 231 214 7.9% 4,719 4,141 14.0%

L/F (%) 71.3% 65.5% 5.8%p 76.5% 66.3% 10.2%p

YIELD (Cent) 15.6 13.0 20.1% 8.1 6.2 30.6%

YIELD (KRW) 181.9 168.5 8.0% 94.3 80.7 16.9%

2010 2Q 2009 2Q

Domestic Passenger

2010 2Q 2009 2Q

International Passenger

Passenger Traffic

12,175

12,934

13,707

13,950

12,860

14,646

76.9

81.3

84.5

96.4

87.1

98.5

10,000

11,000

12,000

13,000

14,000

15,000

16,000

05 2Q 06 2Q 07 2Q 08 2Q 09 2Q 10 2Q

RPK(Mil)

Yield(KRW)

11

Passenger Traffic & Yield Changes

11

Historically the highest

traffic level in all 2nd quarters

■ Continuous traffic growth since 2009 2H

■ Recorded 14,646 million RPK in 2010 2Q, (Historically the highest among all 2Qs)

12

Passenger Revenue by Route

■ Rapid traffic growth in short-haul routes due to recovery of leisure travel demand

1212

2010 2Q

2009 2Q

※Route revenue increased %(YOY) is marked below

15.4%

32.8%

50.0%

25.7%

32.1%

37.3%

Dom Japan China SEA Americas Europe

■ Visa waiver & base effect from previous year contributed in the traffic increase of long-haul routes


600

500

400

300

200

100

0

13

Passenger Revenue by Region Sales

Korea

47%

Japan

14%China

6%

SEA

8%

Americas

19%

Europe

6%

Korea

53%

Japan

12%

China

5%

SEA

7%

Americas

18%

Europe

5%

2009 2Q(1,181.4 billion KRW)

2010 2Q(1,486.0 billion KRW)

■ Passenger revenue in 2Q increased ₩ 304.6 billion (+25.8% YOY)

- Korea region sales increased ₩ 234.7 bil (+42%)

- Overseas sales increased ₩ 69.9 bil (+11%)

14

Changes

Supply (mil AFTK) 3,215 2,616 22.9%

APR 1,037 860 20.6%

MAY 1,111 895 24.1%

JUN 1,067 861 23.9%

Traffic (mil FTK) 2,503 1,983 26.2%

APR 812 656 23.8%

MAY 872 673 29.6%

JUN 819 654 25.2%

L/F (%) 77.9% 75.8% 2.1%p

YIELD (Cent) 32.3 19.1 69.1%

YIELD (KRW) 376.3 247.0 52.3%

2010 2Q 2009 2Q

Cargo Traffic

1,996

2,121

2,441

2,348

1,983

2,503

251 249226

305

247

376

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

2,600

05 2Q 06 2Q 07 2Q 08 2Q 09 2Q 10 2Q

FTK(Mil)

Yield(KRW)

15

Cargo Traffic & Yield Changes

■ Continuous traffic growth since 2009 2H

15

Record high traffic level

■ Recorded 2,503 million FTK, (Historically the highest level among all quarters)

1616

2010 2Q

2009 2Q

500

400

300

200

100

0

71.1%

93.4%10.5%

69.7%

94.2%

112.3%

Cargo Revenue by Route

Dom Japan China SEA Americas Europe

※Route revenue increased %(YOY) is marked below


Major Routes

■ Leaded by IT products, Air Cargo traffic continues its growth

17

Cargo Revenue by Region Sales

Korea

38%

Japan

9%

China

25%

SEA

13%

Americas

8%

Europe

7%

Korea

31%

Japan

8%China

27%

SEA

13%

Americas

12%

Europe

9%

2009 2Q

(547.4 billion KRW)

2010 2Q

(1,020.2 billion KRW)

■ Cargo 2Q revenue increased ₩ 472.8 billion (+86.4% YOY)

- Korea region sales increased ₩ 224.9 billion (+134%)

- Overseas sales increased ₩ 247.9 bil (+65%)

2010 2Q 2009 2Q Changes

Jet Fuel 865.0 665.3 30.0%

Consumption Amt(Mil bbl) 7.72 7.17 7.7%

Average Unit Price (USD) 93.2 64.7 44.1%

Labor 361.3 336.4 7.4%

No. of Employees 19,314 19,160 0.8%

Rental 63.3 64.5 -1.9%

No. of Rented A/C (as end of 2Q) 27 25 8.0%

Depreciation 192.5 178.3 8.0%

No. of A/C (as end of 2Q) 107 103 3.9%

18

Key Expenses(Unit : Billion KRW)

19

Operating Margin Ratio


1,514

754

2,814

1,286

196

-1,164

-251

226 66

-1,273

1,001

1,540

2,202

3,521 7.5%

3.6%

11.9%

5.6%

0.9%

-4.7%

-0.9%

0.8%0.3%

4%

6%

8.5%

12.4%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

-₩1,800

-₩800

₩200

₩1,200

₩2,200

₩3,200

07 1Q 07 2Q 07 3Q 07 4Q 08 1Q 08 2Q 08 3Q 08 4Q 09 1Q 09 2Q 09 3Q 09 4Q 10 1Q 10 2Q

-6.1%

Historically the highest

in all 2nd quarters

■ Operating Margin turned positive since 2009 3Q, and

recorded 12.4% this quarter, which is historically the

highest in all 2nd quarters

20

Translation Gain/Loss & Interest Expense

■ Large Translation loss due to KRW depreciation

■ Interest Expense increased slightly (+0.7% YOY)


2010 2Q 2009 2Q Description

Translation

Loss/Gain (For the period of 1H)

-209.5 -65.42009 Dec 31 : ₩1,167.60

2010 Jun 30 : ₩1,210.30

(₩42.7 difference per 1$)

Interest Expense(For the period of 2Q)

142.9 141.9

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Documents

Korean Airlines 2010 2Q Results · RPK(Mil) Yield(KRW) 11 Passenger Traffic & Yield Changes Historically the highest traffic level in all 2nd quarters Continuous traffic growth since