UPDATE 1-Korean Air posts Q1 net loss as weaker won hurts

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SEOUL, May 7 (Reuters) - Korean Air Co (003490.KS), South Korea's top airline, reported on Thursday its sixth consecutive quarterly net loss as the benefit of lower fuel prices was outweighed by currency-related losses and higher interest costs.

While a quick recovery in travel and cargo demand is unlikely, Korean Air, the world's biggest air cargo carrier, is expected to benefit from the recent strengthening of the won and stablising oil prices.

The won's ongoing recovery is expected to reduce costs at Korean Air, which pays dollars for imported fuel, aircraft rentals and also to service foreign currency debt.

But concerns linger over an outbreak of swine flu which could chill travel demand further.

"Second-quarter results will likely be better than the first quarter's," said Um Kyung-a, an analyst at Shinyoung Securities. "The impact from swine flu is seen limited as it has so far spread less compared with bird flu."

Airlines globally have suffered losses as the economic downturn saps demand for travel and shipping.

Duetsche Lufthansa (LHAG.DE) last week announced contingency plans to cut flights after reporting a worse-than-expected quarterly loss. Hong Kong's Cathay Pacific Airways Ltd (0293.HK) also warned last month of a challenging year.

Korean Air posted a 526.3 billion won ($409.7 million) net loss in the January-March quarter, in line with an average forecast for a 530 billion won loss from Reuters Estimates.

The result compares with a 325.5 billion won loss a year earlier and a revised 644 billion won deficit in the fourth quarter last year.

It reported an operating profit of 6.6 billion won, slightly better than a forecast for a 5.3 billion won loss.

Quarterly sales were 2.26 trillion won, above an average forecast and flat from a year earlier.

Sales from its cargo business fell 18 percent from a year ago as the economic downturn kept overseas traffic low, but demand from South Korean electronics exporters has shown signs of recovery since March, the company said.

Shares in Korean Air were flat at 41,850 won by 0300 GMT, compared with the broader market's 0.8 percent gain. The stock rose 10 percent so far this year through Wednesday, lagging the KOSPI's 24 percent gain. (Reporting by Shin Jieun and Rhee So-eui; Editing by Jonathan Hopfner)