Korean Air Announces Q4 and Full-Year Performance for 2011

Seoul, 31 January 2012 – Korean Air, South Korea’sflagship airline, announced today its results for the fourth quarter and fullyear ended December 31, 2011.

The airline posted operating revenue of3,062.1 billion KRW for the fourth quarter of 2011, up 7.7% compared to thesame period last year, and an operating profit amounted to 76.8 billion KRW.International passenger and cargo businesses remained the major revenuecontributors for the airline in Q4, accounting for 55.1% and 29.3% of theoperating revenue respectively. Compared to the same period last year, netincome for Q4 returned to the black and reached 125 billion KRW.

For the full year of 2011, the airline recorded operating revenueof 11,805.3 billion KRW, up 4.7% year-on-year, and operating profit of 394.1billion KRW. However, due to a surge in jet fuel expenses, a net loss isresulted during the period.

International Passenger Business

During the quarter, it saw increased traffic across all routes,including Americas (up 12%), South-east Asian countries (up 12%), and China (up14%); the international passenger segment recorded a Y-o-Y growth of 10.6% and10.2% in passenger carrying capacity and traffic, reaching 21,081 million ASKand 15,774 million RPK respectively.    Overseas inbound trafficlifted 15% compared to the same period last year.

According to IATA, international air traffic is expected to growby 5.2% in 2012, in which Asia region growth rate is projected to exceed 7%,and hence passenger traffic is expected to continue on a steadily upward trend.In addition, with the introduction of new routes (e.g. Incheon – DaNang,Incheon – Gatwick, Incheon – Urumqi and Incheon – Nairobi) and stepping upfrequency on selected routes, such as Busan – Hong Kong, Incheon – Qingdao,Incheon – Tianjin, Jeju – Beijing and etc., the airline sees potential growthin passenger traffic.

With the latest addition of more fuel efficient aircrafts to thefleet, including Airbus A380 and Boeing B777-300ER, the airline is expected tosee improvement in profitability.

Cargo Business

Cargo traffic recorded a year-on-year fall of 6.7% to 2,284million FTK as it saw a Y-o-Y decrease of 10% and 4% in Korea outbound trafficand transit traffic respectively. While outbound cargo traffic from Chinareported a slump, outbound traffic from south-east Asian Countries, Japan,Americas and Europe recorded increases of 6%, 5%, 6% and 3% respectively. InQ4, it saw the return of wet-lease aircraft in October and November forprofitability improvement. Charter flights to Sao Paulo and Lima were also putinto operation in the quarter.

Going into 2012, cargo traffic is expected to be on a steadilyupward trend with the Free Trade Agreement between Europe and Korea and TheLondon Olympic Games. Korean Air will strive to enhance profitability andsustain growth by focusing operation on new markets development. Korean Airalso sees the potential of leveraging Brazil as a hub and builds the cargonetwork in Latin America.

Korean Air will continue to expand its business prudently whileenhancing the quality of its service in 2012. With its long-standing commitmentto achieving “Excellence in Flight”, Korean Air aims to provide the bestquality to its customers while bringing the best returns to its shareholders.

* Exchange rate on December 31, 2011: 1 USDollar = [1153.3] KRW