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Disclaimer 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 forwardlooking 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. 2
Financial Position (Consolidated) (billion KRW) 2,015 End of Sep. 2016 Changes Rate Current Assets 3,289 3,192-97 -2.9% Cash & Cash equivalent 968 992 25 2.5% Non-current Assets 20,891 20,678-213 -1.0% Aircraft related assets 14,106 14,163 57 0.4% Investment in associates 1) 520 0-520 -100.0% Total Assets 24,180 23,871-310 -1.3% Financial Liabilities 16,198 15,535-663 -4.1% Current 6,041 5,069-972 -16.1% Non-current 10,157 10,466 309 3.0% Other Liabilities 5,484 5,973 489 8.9% Total Liabilities 21,681 21,507-174 -0.8% Total Equity 2,499 2,363-136 -5.4% 1) Book value of Hanjin Shipping shares 3
Income Statement (Consolidated) (billion KRW) 3Q15 Changes Rate Sales 2,973 3,118 145 4.9% Operating Expense 2,631 2,658 27 1.0% Operating Profit 342 460 119 34.7% Non-operating Profit -959 146 1,105 Foreign currency related loss, net -671 638 1,310 Interest expense, net -80-93 13 Impairment loss 1) 30-322 -352 Income Before Tax -618 606 1,223 Turn to profit Net Income -508 511 1,018 Turn to profit 1) Hanjin Shipping related losses 4
Income Statement (Non-consolidated) (billion KRW) 3Q15 Changes Rate Sales 2,919 3,057 138 4.7% Operating Expense 2,587 2,609 22 0.9% Operating Profit 332 448 116 34.9% Non-Operating Profit -970 72 1,042 Foreign currency related loss, net -673 639 1,311 Interest expense, net -77-92 15 Impairment loss 1) - -392-392 Income Before Tax -638 519 1,157 Turn to profit Net Income -510 428 938 Turn to profit 1) Hanjin Shipping related losses 5
Borrowings (Non-consolidated) End of 2015 (As of) Sep. 30 th, 2016 Changes Balance (billion) Ratio Balance (billion) Ratio Balance (billion) Rate USD 8.9 68.2% 8.4 62.5% 0.5 - KRW 3360 21.9% 3780 25.6% 420 12.5% Others (EUR/JPY/HKD in USD) Total (KRW) 1.3 9.9% 1.6 11.9% 0.3 23.1% 15390 100% 14720 100% -670-4.4% - FX Rate as of Dec. 31 st, 2015 : USD1 / KRW1,172.0 - FX Rate as of Sep. 30 th, 2016 : USD1 / KRW1,096.3 6
Revenue Composition (Non-consolidated) 3Q15 (2,919 billion KRW) ( 3,057 billion KRW) Cargo 21.2% Others 9.1% Cargo 19.0% Others Aerospace 7.9% 9.9% Aerospace 6.0% Int'l PAX 57.2% Int'l PAX 60.4% Domestic PAX 4.6% Domestic PAX 4.6% 7
Passenger Traffic International Domestic 3Q15 YoY 3Q15 YoY Capacity (Mil ASK) 22,827 24,243 6.2% 974 997 2.4% JUL 7,399 8,195 10.8% 299 320 7.3% AUG 7,987 8,303 4.0% 351 342-2.5% SEP 7,441 7,745 4.1% 324 335 3.2% Traffic (Mil RPK) 18,083 19,604 8.4% 732 796 8.7% JUL 5,921 6,767 14.3% 213 265 24.3% AUG 6,615 6,858 3.7% 286 282-1.3% SEP 5,547 5,978 7.8% 234 249 6.6% L/F (%) 79.2% 80.9% 1.6%p 75.2% 79.8% 4.6%p Yield (KRW) 92.2 94.0 1.9% 181.1 178.3-1.5% Yield (US Cent) 7.9 8.4 6.1% 15.5 15.9 2.7% 8
Passenger Revenue by Route Operations [billion KRW] 800 600 3Q15 +4% 400 200 +7% +19% +29% +13% +3% +3% 0 Domestic Japan China SEA Oceania America Europe [Revenue : Routes] [Revenue : Regional Sales] America 30% Europe 18% America 15% Europe 5% Oceania 3% SEA 16% China 15% Domestic 7% Japan 11% SEA 7% China 12% Japan 8% Korea 53% 9
Passenger Business Overview 3Q Business Summary Traffic(RPK) Changes : China 30%, Japan 11%, SEA 11%, Europe 6%, America 5%, Oceania 1% Passengers Carried : 14% (Korea Outbound 19%, Overseas 10% ) 4Q Business Outlook & Plan Expect increase in outbound demand while revenue growth slow down with diminished MERS base effect Plan to manage capacity flexibility with charter flights New route : Expanded routes : Reduced routes : Incheon Delhi (5 flights/week) Incheon Las Vegas, Jeju Osaka Incheon Niigata/Nagoya, Jeju Narita 10
Cargo Traffic Cargo (International + Domestic) 3Q15 YoY Capacity (Mil AFTK) 2,590 2,680 3.5% JUL 867 916 5.7% AUG 887 890 0.3% SEP 835 873 4.5% Traffic (Mil FTK) 1,973 2,026 2.7% JUL 667 692 3.7% AUG 666 660-0.9% SEP 640 675 5.4% L/F (%) 76.2% 75.6% -0.6%p Yield (KRW) 282.3 257.7-8.7% Yield (US Cent) 24.2 23.0-4.9% 11
Cargo Revenue by Route Operations [billion KRW] 400 300 3Q15-5% 200 100 0-5% -20% -5% +8% +3% -5% Domestic Japan China SEA Oceania America Europe [Revenue : Routes] [Revenue : Regional Sales] America 43% Oceania 1% SEA 14% Europe 27% Japan 4% China 10% Domestic 1% America 14% SEA 16% Europe 12% China 24% Korea 26% Japan 8% 12
Cargo Business Overview 3Q Business Summary Traffic(FTK) Changes : America 4%, SEA 4%, China 2%, Japan 2%, Europe 0%, Oceania 1% Total Tonnage of Carried : 2% (Korea Outbound 6%, Overseas 4% ) 4Q Business Plan Improve profitability by attracting high-yield cargo items Provide flexible capacity and reduce cost by using belly space of passenger aircraft 13
Operating Expense Breakdown 3Q15 (2,587 billion KRW) ( 2,609 billion KRW) Rentals 2% Commissions 3% In-flight Service 4% Maintenance 2% Fuel 27% Airport related 11% Labor 17% Depreciation 16% Others 18% Rentals 3% Commissions 3% In-flight Service 4% Maintenance 3% Fuel 22% Airport related 12% Labor 17% Depreciation 17% Others 19% 14
Key Expenses 3Q15 (billion KRW) Changes Amount Ratio Fuel 680 586-94 -13.8% Labor 447 456 8 1.9% Depreciation 411 445 35 8.5% Airport related 291 315 23 8.0% In-flight Service 106 115 10 9.0% Commissions 76 76 0-0.4% Maintenance 57 76 20 34.5% Rentals 59 71 12 20.7% Others 461 469 9 1.9% Total 2,587 2,609 22 0.9% 15
Fleet Status (As of Sep. 30 th, 2016) Type Aircrafts Delivery (Month) A380 10 A330 29 B747-400 7 B747-8I 7 B777 38 B737 39 Passenger Total 130 B747-400F 16 B747-8F 6 12 B777F 8 101012 Cargo Total 30 4 Total 160 4 16
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