February 11, 2015 / 10:46 AM / 4 years ago

UPDATE 2-Asiana Airlines orders 25 planes after returning to profit

* To pay $2.83 bln for Airbus A321 NEO; deliveries from 2019

* Plans second low-cost carrier

* Shares up 8 pct on earnings, impending parent sale (Adds analyst comment, data on budget carriers, parent sale)

By Joyce Lee and Sohee Kim

SEOUL, Feb 11 (Reuters) - Asiana Airlines Inc has announced a $2.83 billion order for 25 planes from Airbus Group NV, weeks after returning to profit partly due to rising traffic between its South Korean home and neighbouring China.

The country’s second-largest carrier by revenue after Korean Air Lines Co Ltd will buy A321 NEO narrow-body planes over seven years from 2019 for short and mid-range routes, to replace A321-200 aircraft.

Korea’s airlines benefited from a 42 percent jump in Chinese tourists in 2014, while a rise in the value of the won versus the yen spurred Koreans to take more trips to eastern neighbour Japan, particularly toward the end of the year.

By upgrading its fleet, Asiana can improve competitiveness on such routes in the face of low-cost carriers like Jeju Air who have been winning market share from full-service airlines. Regional flights make up a bigger share of revenue at Asiana than at Korean Air.

“Asiana has less exposure to short-distance routes than local low-cost carriers - and competition in the short-distance space is increasing,” said analyst Park Eun-kyung at Samsung Securities.

Asiana owns low-cost carrier Air Busan Co Ltd based in southern Korea, and plans capitalise on growth in budget travel with a second low-cost airline based around Seoul in the north.

Korean airlines carried 8.14 million passengers last year, up 11 percent from a year earlier, transport ministry data showed. Of that, budget airlines carried around 23.3 percent, more than double the share of 2009.

Asiana is also buying planes for long-haul routes. It has received two of six A380 jumbo jets on order, and will take delivery of 30 A350 wide-body planes from 2017 to 2025.

Asiana’s fleet totalled 85 planes at the end of 2014. For that year, it posted operating profit of 98.1 billion won ($89.22 million), following an 11.2 billion won loss in 2013.

The airline has been bolstering safety oversight since a 2013 crash in San Francisco, and is contesting an order by South Korean authorities that it suspend service on the lucrative Incheon-San Francisco route for 45 days as a penalty.

Shares of Asiana closed 8.1 percent higher on Wednesday. Analysts viewed the rise as investors cheering 2014 earnings as well as the impending sale of Kumho Industrial Co Ltd - a construction firm which owns about 30 percent of Asiana and which will be auctioned by creditors from Feb. 25.

$1 = 1,096.5000 won Editing by Christopher Cushing and Tony Munroe

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below