Korean Air2019 Annual Financial Results

1

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 forward-looking 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.

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Income Statement (Non-consolidated)

2018 2019(E) Changes Remarks

Revenue 126,555 123,000 △3,555 △2.8%

Passenger 77,375 77,675 +300 +0.4% RPK +3.8%, Yield △3.3%

Cargo 30,122 25,574 △4,548 △15.1% RPK △9.8%. Yield △5.9%

Others 19,058 19,751 +693 +3.6% Aerospace +\89.9B, +13.8%

Operating Expense 119,881 120,091 +210 +0.2%

Fuel Expense 32,958 31,832 △1,126 △3.4%Fuel Price △8.3%, Fuel Consumption △0.4%,

Average FX rate (\/$) +6.0%

Other Expense 86,528 88,259 +1,731 +2.0%

Operating Income6,674[5.3%]

2,909[2.4%]

△3,765[△2.9%p]

△56.4%

Non-Operating Income △8,027 △9,752 △1,725

Interest Expense, Net △4,548 △5,059 △511

Foreign CurrencyTranslation Gain/Loss, Net

△3,636 △3,758 △122 Year End Currency: +\39.7/$ (+3.6%)

Derivatives +464 +931 +467

Income before Tax △1,353 △6,843 △5,490

Net Income △1,074 △5,708 △4,634

(Unit: KRW: 00M)

Revenue \12,300B (-\355.5B, -2.8%, yoy)

Foreign Currency Translation Loss (-\375.8B)

• Average F/X Rate : Year 2018 \1,100.4/$ Year 2019 \1,166.1/$ (+\65.7, +6.0%)

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Dec. 31, 2018 Dec. 31, 2019 Changes Remarks

Current Assets 35,702 32,579 △3,123 △8.7%

Cash Equivalent 12,613 11,458 △1,155 △9.2% Including short term savings

Non-Current Assets 208,031 223,727 +15,696 +7.5%

Aircraft Related Assets 150,276 164,118 +13,842 +9.2% Lease accounting change +\1.13T

Total Assets 243,733 256,306 +12,573 +5.2%

Financial Liabilities 146,732 157,568 +10,836 +7.4%Lease accounting change +\1.475T, currency +\253.2B,Net borrowings △\644.6B

Other Liabilities 66,782 70,574 +3,792 +5.7%

Advance Received 35,384 36,378 +994 +2.8%

Total Liabilities 213,514 228,142 +14,628 +6.9% Liability to Equity Ratio 707% 810% (+103%p)

Total Equity 30,219 28,164 △2,055 △6.8%

Financial Position (Non-consolidated)

(Unit: KRW 00M)

• Year End FX Rate : \1,118.1/$1 (Dec. 31, 2018) \1,157.8/$1 (Dec. 31, 2019) (+\39.7, +3.6%)

\644.6B Decrease in Net Borrowings, excluding Lease Accounting Change & F/X effects

- Lease Accounting Standard Change: +52%p

- Exchange Rate Change: +64%p

☞ Change of Liability to Equity Ratio (+103%p)

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Passenger Business

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20172018 2019

YoY YoY

ASK (mil. km) 98,405 99,918 +1.5% 101,108 +1.2%

RPK (mil. km) 77,843 80,191 +3.0% 83,273 +3.8%

L/F 79.1% 80.3% +1.2%p 82.4% +2.1%p

Yield (KRW) 90.5 96.5 +6.6% 93.3 -3.3%

Revenue (KRW 00M) 70,455 77,375 +9.8% 77,675 +0.4%

+8%

+10%+10%

+13%+9%

-7% -2%

+8%

0%

+4%

-1%

-15%+5%

0%

-

5,000

10,000

15,000

20,000

25,000

Americas Europe SEA China Japan Domestic Oceania

2017 2018 2019[Unit: KRW 00M]

Revenue Changes

Passenger Traffic Increase due to Advance Response to Negative Market Conditions

- J/V with Delta Sustaining Trans-Pacific Demand Increase

- Southeast Asia Market Development Complementing Japan / Hong Kong Demand Decrease

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Passenger Business– Sales by Route/Region

Sales by Route Sales by Region

27% 27% 29%

18% 18%19%

21% 21%21%

12% 13%12%

11% 11% 9%

7% 6% 6%

4% 4% 4%

2017 2018 2019

Oceania

Domestic

Japan

China

SEA

Europe

Americas

64% 63% 61%

13% 13% 16%

6% 6%7%

6% 7%7%

6% 6%5%

5% 5% 4%

2017 2018 2019

Europe

Japan

China

SEA

Americas

Korea

6

Cargo Business

Revenue Changes

7

20172018 2019

YoY YoY

AFTK (mil. ton/km) 10,944 10,837 -1.0% 10,480 -3.3%

FTK (mil. ton/km) 8,593 8,293 -3.5% 7,482 -9.8%

L/F 78.5% 76.5% -2.0%p 71.4% -5.1%p

Yield (KRW) 326.9 363.2 +11.1% 341.8 -5.9%

Revenue (KRW 00M) 28,087 30,122 +7.2% 25,574 -15.1%

+11%

+5%

+2%

+14%+27% -7% +1%

-16%

-20%

-9%+5%

-9%

-14% -14%

-

5,000

10,000

Americas Eurpoe SEA China Japan Domestic Oceania

2017 2018 2019

[Unit: KRW 00M]

Cargo Traffic Decrease due to Prolonged US-China Trade Tension & Global Trade Slowdown

Recovery Plan to Develop Growth Market with Major Global Manufacturers

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Cargo Business – Sales by Route/Region

Sales by Route

42% 43% 42%

26% 25%23%

15% 14%15%

10% 10% 12%

5% 6% 6%1% 1% 1%

1% 1% 1%

2017 2018 2019

Oceania

Domestic

Japan

China

SEA

Europe

Americas

25% 24% 24%

15% 14% 16%

26%25%

25%

13%13%

14%

12%11%

11%

9%13% 10%

2017 2018 2019

Japan

Europe

Americas

Korea

SEA

China

Sales by Region

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Operating Expense

Fuel

26%

Labor

21%

Airport /

PAX&CGO

Handling

18%

Depreciation,

Rentals

17%

Manufacturing

5%

Maintenance

2% Others

11%

+26%

+8%

+7% 0%

+6% -11%

+15%

-3%

+4%

+6%0%

+42%

-49%

-4%

-

10,000

20,000

30,000

40,000

Fuel Labor Airport /

PAX&CGO

Handling

Depreciation,

Rentals

Manufacturing Maintenance Others

2017년 2018년 2019년

[Unit : KRW 00M]

Operating Expense \12,009B (+\60.5B, +0.5%, yoy)

- Fuel \3.200B (-\113B, -3.4%) : Fuel price decrease, Currency increase

- Labor \2.500B (+\101B, +4.3%) : New hire & Welfare increase

- Airport/Handling \2.200B (+\125B, +6.1%) : Airport fees increase

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Passenger Business Outlook & Plan

Increase Long/Medium-Haul Routes

Increase Frequency in America/Southeast Asia Routes (L.A, Boston, Singapore, Deli)

Diversify Eastern Europe Destinations (New Route: Budapest, May 2020)

Improve Aircraft Utilization

Optimize Flight Patterns per Aircraft Type

Utilize Charters to Capture New Demand

Improve Delta J/V Profitability

Increase Transit Demand & US Domestic Connection Sales

Expand US Mainstream Corporate Sales

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Cargo Business Outlook & Plan

Improve Sales by Developing Growth Market

Increase Alternative Market Supply (Eastern Europe, China, South America)

Continue Supply Increase in Growing Market (following manufacturing facilities relocation)

Improve Profit by Supply Control

Optimize Supply to Demand Growing Markets (Charters)

Securing Contract / Project Shipment

Attract Demand from Global Manufacturer and Major Forwarder

Enhance Marketing for Major Clients (Semi-Conductor Equipment, Fashion Items)

Expand High-Margin Sales (Medical Products, E-commerce, Fresh Food, IT Equipment)

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Fleet Status

Type As of Dec. 31, 2018 As of Dec. 31, 2019

Wide Body

A380 10 10

A330 29 29

B747-400 2 2

B747-8I 10 10

B777 42 44

B787-9 9 10

Narrow BodyB737-800/900 32 31

A220 (CS300) 9 10

Passenger Total 143 146

Freighter

B747F 4 4

B747-8F 7 7

B777F 12 12

Cargo Total 23 23

Total 166 169

• B737-MAX8: Introduction delayed until safety is confirmed

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Thank you