이 기사는 2021년 11월 25일 08:06 thebell 에 표출된 기사입니다.

South Korea’s two flagship full-service carriers, Korean Air Lines and Asiana Airlines, haven’t fully benefited from lucrative cargo deliveries as their profitability has been hit by a weakened won due to the prospect of the U.S. Federal Reserve tapering its bond purchases in the third quarter.

Earlier this month, the Federal Open Market Committee (FOMC) announced the start of balance sheet tapering at a pace of $15 billion per month - $10 billion of Treasuries and $5 billion of mortgage-backed securities - in November and December.

The Fed’s tapering plan has been widely expected as the U.S. consumer price index (CPI), which is a basket of products ranging from gasoline and health care to groceries and rents, has increased stably, up 5.4% in mid-October from a year ago.

The CPI has hovered around 5-6% this year. Market-based measures have turned more hawkish, with the U.S. 10-year Treasury yield soaring to a 1.5% level in November from a 1% level at the beginning of this year.

The Korean won has continued weakening against the U.S. dollar this year. The won declined from around 1,100 won against the U.S. dollar at the beginning of this year to nearly 1,200 won in November, the lowest over the last 12 months.

The weakening won has put a negative impact on Korean Air and Asiana Airlines. The two full-service carriers incur large amount of foreign currency-denominated debts when they buy aircrafts from aircraft manufacturers such as Boeing and Airbus. The valuation of the debts and debt-related interest rates increased as the won weakened against the U.S. dollar due to the tapering.

Korean Air's cumulative foreign currency translation loss stood at 553 billion won in the third quarter on a non-consolidated basis, up 135.6% from a year ago. Its smaller rival Asiana Airlines recorded foreign currency translation loss of 544.5 billion won in the third quarter, up 179% from a year earlier.

The size of the foreign currency translation losses was more than enough to offset a large increase in operating profits due to the booming cargo business. Foreign currency translation losses are categorized as other expenses, a type of non-operating expenses. Korean Air and Asiana Airlines posted other expenses of 777 billion won and 633.1 billion won, respectively, in the third quarter, which were larger than operating profits of 759.9 billion won and 243.9 billion won.

Korean Air’s operating profit increased by 7.3 times year-on-year in the third quarter, while Asiana Airlines swung to an operating profit during the same period. However, Asiana Airlines continued to report net loss and Korean Air’s net profit was not as large as its operating profit due to foreign currency translation losses.

“The foreign currency translation losses increased in the third quarter compared to the same period last year, but the fluctuation in the non-operating loss was reduced thanks to our exchange rate risk management efforts using derivatives,” said an official at Korean Air. The company has signed a currency rate swap derivatives contract with a financial institution to hedge foreign exchange risks.

The official said that the company’s cumulative gains on derivatives of 114.7 billion won in the third quarter partly offset the increase in its foreign currency translation loss. (Reporting by Doung Yang)