Home / World Business
Fri, Aug 03, 2007 - Page 10 News List

Korean Air admits price fixing

PLEA AGREEMENT The US Justice Department charged the firm with colluding with its competitors to increase the surcharge for each kilogram of cargo shipped from the US


South Korea's main flag carrier Korean Air Co apologized yesterday after admitting fixing prices on international passenger and cargo flights and agreeing to pay US$300 million in fines in the US.

"Korean Air apologizes to shareholders and customers for causing the trouble," said Ahn Yong-seok, a company lawyer.

Ahn confirmed the plea agreement on the charges, resulting from the US Justice Department's antitrust investigation of the air transport industry since early last year, but played down its business impact.

"The impact that the case will have on Korean Air's business and other operations will not be serious," Ahn said.

He said the airline's compliance officer will strengthen education and campaigns so it abides by US and global fair trade rules in future.

"On this occasion, Korean Air will make further efforts to become a respected leader in the airline industry," he said.

Under the plea accord, which is subject to US federal court approval, Korean Air has agreed to fully cooperate with the industry-wide antitrust investigations that are still ongoing.

The Justice Department charged Korean Air with colluding with its competitors to increase the fuel surcharge from US$0.10 to as high as US$0.60 for each kilogram of cargo shipped from the US.

It also charged Korean Air with agreeing with its rival to fix certain passenger fares for flights from the US to South Korea.

Meanwhile, Korean Air yesterday reported a net loss for the second quarter after the huge fine for price-fixing.

"The US$300 million fine by the Department of Justice ate into the second quarter results," said Lee Ji-hye, a company spokesman.

Korean Air, the world's largest cargo carrier by freight volume, posted a net loss of 214.4 billion won (US$232 million) in the April to June quarter, swinging from a net profit of 14.9 billion won a year earlier.

Operating profit for the quarter rose 9.3 percent to 75.4 billion won from 69 billion won a year ago, and sales climbed 8 percent to 2.12 trillion won from 1.94 trillion won.

"Increasing overseas travel demand, which buoyed the second quarter results, will continue to support the bottom line throughout the year," Lee said.

The company posted a net loss of 83.6 billion won for the first half of the year, shifting from a profit of 142.2 billion won.

Operating profit for the six months rose 42 percent to 226.8 billion won from 160.1 billion won a year ago. First half sales rose 9.8 percent to 4.14 trillion won from 3.77 trillion won.

This story has been viewed 2551 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top