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Agencies upgrade Asiana credit rating

The country’s three credit rating agencies in concert lifted their ratings of corporate bonds for Asiana Airlines Inc. one notch to “BBB+” from “BBB” Tuesday, citing increased profitability and growing demand for air travel.

NICE Investors Service, Korea Ratings and Korea Investors Service referred the raise to the company’s all-time high operating profit last year, success in slashing fuel expenses, new overseas flight routes and improved financial structure following its sell-off plan for Korea Express.
Asiana Airlines president and chief executive Yoon Young-doo
Asiana Airlines president and chief executive Yoon Young-doo

“The credit upgrade uplifted Asiana’s domestic and international credit standing,” a company official in the finance unit said.

“It will allow the company to cut costs by generating funds at lower interest rates and to significantly improve liquidity by issuing long-term bonds.”

Korea’s second-largest air carrier said the rating is the highest level since the Asian financial crisis in 1998 and reflects its ongoing efforts to perk up financial soundness.

Its ratings of corporate bonds moved from “BB+” to “BBB-” in January 2005 then to “BBB” in June 2007, the company said.

Asiana shares closed at 9,280 won ($8.49) Tuesday, up 1.64 percent.

Sales of last year topped 5 trillion won, up more than 30 percent from 2009, boosted by rising demand for flights. Operating profit reached 635.7 billion won.

The company plans to provide new flight services between Seoul and Beijing starting July 1 and increase frequency for routes to main U.S. cities such as San Francisco and Seattle.

According to the Ministry of Land, Transport and Maritime Affairs, the number of passengers using international flights rose about 6 percent during the first quarter of the year in the face of the global economic recovery.

Passengers using international flights in and out of Korea’s airports came to 10.13 million during the January-March period, up 5.8 percent from the same quarter a year earlier, the ministry reported last year.

By Shin Hyon-hee (heeshin@heraldcorp.com)
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