Korean Air expects its cargo business to cool in the fourth quarter amid weaker demand and the impact of a global economic slowdown.

The South Korean flag carrier made the comment as it reported strong cargo revenue in the third quarter, although volumes were down during the period.

In its non-consolidated income report, Korean Air said cargo revenue in the July to September period reached KRW 1.8564 trillion (US$1.3 billion), a 12% year-on-year increase.

"The quarter saw a drop in cargo demand due to intensified competition following the increase in passenger plane belly cargo capacity. A decrease in consumer spending due to inflation and seasonal trends has also contributed to the reduced cargo demand," Korean Air said in a statement.

In general, the airline made a revenue of KRW 3.6684 trillion (US$2.5567 billion) and an operating profit of KRW 839.2 billion (US$584.9 million) in the third quarter.

It added that the recovery in demand following the relaxation of travel restrictions such as the removal of pre-arrival mandatory COVID-19 testing has also led the airline to bring in a passenger revenue of KRW 1.4543 trillion (US$1 billion) in the third quarter, for an increase of 338% year on year.  

Weaker Q4 cargo demand seen

Moving forward, Korean Air signalled that the fourth quarter cargo performance would weaken on the back of ongoing market challenges.

"While a weaker fourth quarter cargo business outlook is expected due to the global economic slowdown and diminished demand, the airline seeks to increase revenue by securing year-end seasonal demand," it said.

Nonetheless, Korean Air noted that the fourth quarter passenger business outlook is bullish on strong passenger demand, and the airline will continue to operate flexibly through charter and extra flights.

"With a grim market outlook on inflation, weakened currency, and high interest rates, Korean Air will continue to address external challenges and minimize their impact," the carrier said.