Investor Relations 2012

2011 4Q P f &2011. 4Q Performance &2012 Business Plan

2012.02.10

C- Contents -1. 2011. 4Q Summary

1) Summary --------------------------------------------------------- 1

2) Compositions --------------------------------------------------------- 3

2. 2011. 4Q Financial Performance0 Q a c a e o a ce1) Income Statement --------------------------------------------------------- 5

2) Balance Sheet --------------------------------------------------------- 6

3) C t B kd 73) Cost Breakdown --------------------------------------------------------- 7

3. 2011. 4Q Operating Performance1) Int’l Passenger --------------------------------------------------------- 8

2) Cargo --------------------------------------------------------- 10

4. Fleet Plan --------------------------------------------------------- 12

5. Market Demand

1) Int’l Passenger Demand --------------------------------------------------------- 13

2) Cargo Demand --------------------------------------------------------- 15

2012 B i Pl 176. 2012 Business Plan --------------------------------------------------------- 17

1) Summary(Non consolidated)

1. 2011. 4Q Summary

1) Summary(Non-consolidated)

2011 Revenue increased by 6% due to the incensement of Chinese and Japanese tourist and expansion of long haul, but Operating income decreased by 40% due to the high fuel price and global economy slowdown

(Unit : KRW 100mil)

13 547549

(Unit : KRW 100mil)

53,3103 434

5,690 (11.3%)

Revenue Operating Income (Op. Margin)

13,547

(7.8%)

12,567(4.1%)

45.4%(+1 1%p)

378 (3.0%)(5.8%)

50,3953,434(6.4%)-39.7%

(-4.9%p)

(11.3%)

(+1.1%p)

’10.4Q. ’11.4Q.

Income Statement

’10.4Q. ’11.4Q.2010 2011 2010 2011

(Unit : KRW 100mil)

Category 2011.4Q 2010.4Q Change(%) 2011 2010 Change(%)

Revenue 13,547 12,567 7.8% 53,310 50,395 5.8%Operating

Income 549 378 45.4% 3,434 5,690 -39.7%Income- Op Margin 4.1% 3.0% 1.1%p 6.4% 11.3% -4.9%p

Net Income -157 -100 - 164 2,413 -93.2% 1

1) Summary(Non-consolidated)

1. 2011. 4Q Summary

1) Summary(Non consolidated)

By operating cash flow and disposal of Korea Express stake, Borrowings decreased 0.8tril. to 2.7tril. and debt ratio decreased by 86%p to 550%

Capital Stock

9 165

Borrowings

34,862

Debt Ratio

695% 636%

(Unit : KRW 100mil.)

8,9219,165

(244) 26,669(-8,194)

695%485%

636% 550%

2010 2011 2010 2011

2008 2009 2010 2011

※ Debt ratio in 2008, 2009 based on K-GAAP

Balance Sheet Borrowings

Category 2011.12 2010.12 ChangeCategory 2011.12 2010.12 Change

(Unit : KRW 100mil.)

Total(KRW 100mil.) 26,669 34,862 -8,194

K R W(100mil.) 18,811 24,559 -5,748

Assets 52,712 59,471 -6,758

Liabilities 44,607 51,394 -6,787

Equity 8,105 8,077 29 U S D(mil.) 675 856 -181

J P Y(mil.) 487 3,988 -3,5012

- Capital Stock 9,165 8,921 244

Debt ratio 550.4% 636.3% 86.0%p

2) Compositions

1. 2011. 4Q Summary

2) Compositions

Revenue Composition Cost Composition

Labor

11 3%DomesticOthers

11.3%

Others

30.9%

Pax

5.4%

9.3%

(+0.4%p)

(-0.5%p) (-2.6%p)

( 1 4%p)

FuelM i tSales

CommissionI t’l P

Cargo

26.9%

( 1 3%p)

(-1.4%p)

Fuel

38.4%

Lease RentalDep. &

Maintenance4.5%

Commission2.0%Int’l Pax

58.4%

(+1.3%p)

(-1.3%p)

(+7.5%p)(+0.0%p)(-3.4%p)

Lease Rental8.2%

Dep. & Amortization

4.6% (+0.5%p)(-0.6%p)

3

[Above numbers are based on 4Q.2011. data]

[() is year-on-year change %p]

2) Compositions (cont’d)

1. 2011. 4Q Summary

2) Compositions (cont d)

Revenue Composition by Passenger Routes Revenue Composition by Cargo Routes

Domestic

8 5%Europe

Oceania

5.5%(-0.3%p)

Domestic

0.4%

Japan

6.6%

Oceania

0.8%(+0.1%p)(-0.1%p)

8.5%

Japan

23.0%USA

7.4%(+0.2%p)

(+0.8%p)SE Asia

15.1%Europe

22.3%

(+0.0%p)

(+0.2%p)(+0.8%p)23.0%USA

17.8% (-0.6%p)(-0.8%p)

China

7.5%(-1.1%p)

( p)

SE Asia

20.3%

China

17.6%(+0 3%p)

USA

47.3%

( . %p)

(+0.1%p)(+0.3%p)(+0.3%p) ( 0.1%p)

4

[Above numbers are based on 4Q.2011. data]

[() is year-on-year change %p]

2. 2011. 4Q Financial Performance

1) Income Statement (Non consolidated)

CategoryQuarterly Cumulative

’11 4Q ’10 4Q Change Change 2011 2010 Change Change

1) Income Statement (Non-consolidated)(Unit : KRW 100mil.)

’11.4Q. ’10.4Q. Change g(%) 2011 2010 Change g

(%)

Revenue 13,547 12,567 980 7.8% 53,310 50,395 2,915 5.8%

Cost of Sales 11,640 10,368 1,272 12.3% 44,225 38,116 6,109 16.0%

SG & A. Expenses 1,358 1,821 -463 -25.4% 5,651 6,589 -938 -14.2%

Operating Income 549 378 171 45.4% 3,434 5,690 -2,256 -39.7%

O M i (%) 4 1% 3 0% 1 1% 6 4% 11 3% 4 9%- Op. Margin(%) 4.1% 3.0% 1.1%p - 6.4% 11.3% -4.9%p -

Non-Operating Income -846 -511 -335 - -3,278 -2,504 -774 -

Other Gain 2,055 438 1,617 369.6% 4,172 1,754 2,418 137.9%

Other Loss 2,498 441 2,057 466.8% 5,677 2,102 3,574 170.0%

- Foreign Currency related Gain/Loss 36 -16 52 - -251 172 -423 -

Financial Gain 48 32 15 47 4% 146 121 25 20 6%Financial Gain 48 32 15 47.4% 146 121 25 20.6%

Financial Loss 450 540 -90 -16.6% 1,914 2,277 -363 -15.9%

- Net Interest Cost 402 507 -105 -20.7% 1,768 2,156 -387 -18.0%

I B f T 296 133 164 155 3 186 3 030 95 1%Income Before Taxes -296 -133 -164 - 155 3,186 -3,030 -95.1%

Net Income -157 -100 -57 - 164 2,413 -2,249 -93.2%

5

2. 2011. 4Q Financial Performance

Category 2011.12 2010.12 Change Change(%)

2) Balance Sheet (Non-consolidated)(Unit : KRW 100mil.)

Current Assets 8,308 8,129 179 2.2%

Non-Current Assets 44,404 42,606 1,798 4.2%

Non-Current Assets held for sale 0 8,735 -8,735 -100.0%

Total Assets 52,712 59,471 -6,758 -11.4%

Current Liabilities 25,359 24,595 764 3.1%

Non-Current Liabilities 19 248 26 799 -7 551 -28 2%Non Current Liabilities 19,248 26,799 -7,551 -28.2%

■ Borrowings with Interest 26,669 34,862 -8,194 -23.5%

- KRW Borrowings 18,811 24,559 -5,748 -23.4%

- Foreign Currency Borrowings 7,857 10,303 -2,446 -23.7%

■ Borrowings without Interest 17,939 16,532 1,407 8.5%

Total Liabilities 44,607 51,394 -6,787 -13.2%

Capital Stock＊ 9,165 8,921 244 2.7%

Total Equity 8,105 8,077 29 0.4%

Debt Ratio 550 4% 636 3% 86 0%pDebt Ratio 550.4% 636.3% -86.0%p -

6

＊ The number of activated warrants related to BW was 8.137 thou. as of 2011.12.31＊ The number of remained warrants related to BW was 8,114 thou. as of 2012.02.03(Expire date : 2012.02.29)

2. 2011.4Q Financial Performance

3) Cost Breakdown (Unit : KRW 100mil )

Category 2011.4Q. 2010.4Q.Changes

RemarksDifference Change(%)

Total Expense 12 998 12 189 809 6 6%

3) Cost Breakdown (Unit : KRW 100mil.)

Total Expense 12,998 12,189 809 6.6%

- Cost of Sales 11,640 10,368 1,272 12.3%

- SG & A Expenses 1,358 1,821 -463 -25.4%

The fuel price and consumption- SG & A Expenses 4,994 3,648 1,346 36.9% The fuel price and consumption increased

- Fuel Price 301.0 232.5 68.5 29.5%

- Consumption(Mil. USG) 149.0 140.0 9.0 6.4%

- Exchange rate (￦/$) 1,113.3 1,120.0 -6.7 -0.6%

Wages 1,461 2,123 -662 -31.2% The 2010 incentive effect of year-on-year

- Number of 9 0 3 8 80 493 %Number of employees

9,073 8,580 493 5.7%

Rental Expenses 1,068 912 156 17.1%

Depreciation 593 613 -20 -3.2%

Maintenance Expenses 591 532 59 11.1%

Sales Commission 265 638 - 373 -58.5% Sales commission for passenger flight was abolished in Korea from 2011.04.01

* Interest Expenses 450 540 -90 -16.6% Borrowing reduced by KRW 819bil. year –on –year

7

3. 2011. 4Q Operating Performance

1) Int’l Passenger

RPK and Yield in 2011. 4Q increased by 10% and 7% respectively due to the increment of inbound demands,which increased by rising average earnings and the weak won, and expansion of the USA and Europe routes

) g

Item ‘11. 4Q. ‘10. 4Q. Change Change(%)Rev(KRW 100 Mil.) 7,817 6,818 998 14.6%

ASK (Mil K )

Operating

ASK (Mil. Km) 9,660 8,819 8,413 9.5%

RPK (Mil. Km) 7,180 6,700 4,795 7.2%

L/F 74.3% 76.0% -1.7%p -

Yield (KRW) 108.9 101.8 7.1 7.0%

Yield (￠) 9.8 9.1 0.7 7.6%

Routes (Revenue doesn’t include sales commission)

Routes RPK(Mil. Km) Yield (KRW)

‘11. 4Q. ‘10. 4Q. Change(%) ‘11. 4Q. ‘10. 4Q. Change(%)Int’l Passenger 7,180 6,700 7.2% 108.9 101.8 7.0%

J 796 830 4 0% 246 7 213 1 15 8%Japan 796 830 -4.0% 246.7 213.1 15.8%S.E. Asia 1,955 1,775 10.2% 88.9 83.7 6.2%China 824 764 7.7% 182.3 168.2 8.3%USA 2 200 2 105 4 5% 69 0 65 2 5 7%USA 2,200 2,105 4.5% 69.0 65.2 5.7%EU 814 626 30.0% 77.1 76.1 1.3%Oceania 590 600 -1.7% 79.5 71.7 10.8%

8

3. 2011. 4Q Operating Performance

1) Int’l Passenger (Cont’d) (U it Mil K )

7 021 7 144 6 9987,826

7 180RPK Change(%)

Int’l Passenger RPK

1) Int l Passenger (Cont d) (Unit : Mil. Km)

5,779 5,690 5,9535,300 5,501

5,122

6,227 5,998

7,021 6,7637,144

6,700 6,749 6,998 7,180

28%32%

8% 7% 5%-2% -5%

-10%

5%13% 15% 12%

-4%3%

10% 7%

'08.1Q 2Q 3Q 4Q '09.1Q 2Q 3Q 4Q '10.1Q 2Q 3Q 4Q '11.1Q 2Q 3Q 4Q

112 113Yield 증감률

Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q

Int’l Passenger Yield (Unit : KRW)

Change(%)

90 92

104 10597

86 90 88 91 93

112102 105 103

113 109

21% 24%

Yield 증감률Change(%)112

7%14% 14%

21%

8%

-7%14%

-7%

9%

24%16% 16%

10%1%

7%

-14% -17%'08.1Q 2Q 3Q 4Q '09.1Q 2Q 3Q 4Q '10.1Q 2Q 3Q 4Q '11.1Q 2Q 3Q 4Q

9(Change rate : year-on-year)

3. 2011. 4Q Operating Performance

2) Cargo

O ti

) g2011.4Q. RTK increased by 7% due to the increment of cargo supply and luring cargo demand but Yield decreased by 5% due to discounted ticket price by global economy slowdown

Item ‘11. 4Q. ‘10. 4Q. Change Change(%)Rev(KRW 100Mil.) 3,481 3,434 47 1.4%

ATK (Mil. Km) 1,297 1,207 90 7.4%

Operating

RTK (Mil. Km) 1,027 964 64 6.6%

L/F 79.2% 79.8% -0.6%p -

Yield (KRW) 338.8 356.4 17.6 -4.9%

R tRTK (Mil. Km) Yield (KRW)

Yield (￠) 30.4 31.8 -1.4 -4.4%

Routes (Revenue doesn’t include sales commission)

Routes‘11. 4Q. ‘10. 4Q. Change(%) ‘11. 4Q. ‘10. 4Q. Change(%)

Cargo Total 1,027 964 6.6% 338.8 356.4 -4.9%Japan 24 25 -1.8% 938.3 896.6 4.7%pS.E. Asia 127 128 -0.6% 415.2 400.6 3.7%China 26 30 -15.3% 1,023.9 973.7 5.2%USA 597 532 12.2% 276.0 304.0 -9.2%EU 242 235 2.8% 321.5 317.2 1.4%Oceania 9 10 -14.2% 308.9 303.1 1.9%

10

3. 2011. 4Q Operating Performance

2) Cargo (Cont’d)

861 867908 889

929879

964 953 979 963RTK 증감률Cargo RTK

) g ( )

1,027

(Unit : Mil. Km)

Change(%)

861 867 834777

703741

785

879

17%

27%25%

12%7% 10% 7%

1%-3% -3%

-20% -18%-15%

-6%

6% 7% 5%10% 7%

363 375387

368 364

Yield 증감률

20%'08.1Q 2Q 3Q 4Q '09.1Q 2Q 3Q 4Q '10.1Q 2Q 3Q 4Q '11.1Q 2Q 3Q 4Q

Cargo Yield (Unit : KRW)Change(%)

271

316

363 357

255261 303

375349 368 356

335364

325 339

36%47%

28%37%

48%

21%

13%

28%

-6%16%

5%

21%

-5%-4% -6%

-12%-5%

-18% -16%4% 12%

'08.1Q 2Q 3Q 4Q '09.1Q 2Q 3Q 4Q '10.1Q 2Q 3Q 4Q '11.1Q 2Q 3Q 4Q

11(Change rate : year-on-year)

4. Fleet Plan

Fleet Status

Category ‘11.12 2010 Change Operating Finance Owned 2012(E)Total 71 69 2 44 17 10 80 Ratio 62% 24% 14%Ratio 62% 24% 14%

Passenger 62 59 3 42 14 6 69 A320-200 11 11 0 11 10 A321-100 2 2 0 2 2 A321 200 15 13 2 15 20A321-200 15 13 2 15 20 A330-300 10 9 1 10 12B737-400 2 2 0 1 1 2 B767-300 7 7 0 4 3 7 B777-200ER 11 11 0 3 8 12B747-Pax 2 2 0 2 2 B747-Com 2 2 0 1 1 2

Freighter 9 10 1 2 3 4 11Freighter 9 10 -1 2 3 4 11 B767-Frt 1 1 0 1 1 B747-Frt 8 9 -1 2 2 4 10

A380 +6 FleetsDelivered Aircraft in 2011- A321 : +2 Fleets(Jan, Mar)- A330 : +1 Fleet(Mar)

Fleet Plan for 2012

A380 +6 Fleets- Delivery from 2014 to 2017- Jumbo A/C with more than 500 seats- Expand of long haul routes

12

Fleet Plan for 2012- Passenger: +7 Fleets(narrow body +4, mid/wide +3)- Freighter: +2 Fleets(B747-400)※ B777 is only fleet introduced by financing lease

A350 XWB(800/900/1000) +30 Fleets- Delivery form 2016 to 2022- A/C for Mid/long haul routes with 270~350 seats- Eco-friendly Aircraft(Low noise & emission)

5. Market Demand – 1) Int’l Passenger

Int’l Passenger Demand

Int’l Passenger Transit

g

4,500 Thou. Pax 550 Thou. Pax

3,500

4,000

,

400

450

500

2,000

2,500

3,000

250

300

350

Outbound Inbound

1 2 3 4 5 6 7 8 9 10 11 12 Month2007 2008 2009 2010 2011

1 2 3 4 5 6 7 8 9 10 11 12 Month2007 2008 2009 2010 2011

800

900

1,000 Thou. Pax

1,200

1,400 Thou. Pax

500

600

700

800

1,000

400

1 2 3 4 5 6 7 8 9 10 11 12 Month

600

1 2 3 4 5 6 7 8 9 10 11 12 Month13

[Source : KTO, Incheon Airport Corporation, Korea Airport Corporation]

D d f M j C t i

5. Market Demand – 1)Int’l Passenger Demand(Cont’d)

ChinaOutbound Inbound

Demand of Major Countries

2008 2009 2010 20112008 2009 2010 2011

300

400

500 Thou. Pax

150

200

250

300 Thou. Pax

Japan

200

300

1 2 3 4 5 6 7 8 9 10 11 12 Month

300Thou. Pax

50

100

1 2 3 4 5 6 7 8 9 10 11 12 Month

350 Thou. Paxp

100

150

200

250

200

250

300

350

70 Thou. PaxUSA 150Thou. Pax

50

100

1 2 3 4 5 6 7 8 9 10 11 12 Month

150

200

1 2 3 4 5 6 7 8 9 10 11 12 Month

40

50

60

507090

110130

30

1 2 3 4 5 6 7 8 9 10 11 12 Month

14

3050

1 2 3 4 5 6 7 8 9 10 11 12Month

[Source : KTO]

5. Market Demand – 2) Cargo

Cargo Demand

120 Thou. Ton2008 2009 2010 2011

Cargo Transit

g

280 Thou Ton

2008 2009 2010 2011

100

110

230

280 Thou. Ton

70

80

90

130

180

70

1 2 3 4 5 6 7 8 9 10 11 12 Month

Outbound(except transit)

Inbound(except transit)

130

1 2 3 4 5 6 7 8 9 10 11 12 Month

70

80 Thou. Ton

60

70 Thou. Ton

50

60

30

40

50

40

1 2 3 4 5 6 7 8 9 10 11 12 Month

20

1 2 3 4 5 6 7 8 9 10 11 12Month

15[Source : Incheon Airport Corporation]

5. Market Demand – 2) Cargo(cont’d)

Composition of Cargo Export (Weight)

Chemicals5.6%

Plastics

Others4.1%

Wireless devices10.0%

ChemicalsChemicals

7.0%7.0%OthersOthers

4.8%4.8%

Wireless devices9.7%

Plastics4.8% Textiles

9.5%

Steel / MetalElectric

Computers3.5%

PlasticsPlastics

4.9%4.9%TextilesTextiles

10.8%10.8%

ElectricElectric

Computers3.0%

4.8%

Machinery259%

devices45.4% 2010 Steel / MetalSteel / Metal

4.4%4.4%

Electric Electric

devicesdevices

39.8%39.8%

DisplayPanels3.5%

2011DisplayPanels9.7% 25.9%

Semi-conductors

Car parts 8.6%

MachineryMachinery

27.7%27.7%Semi-conductors

5.7%

Car parts 9.6%

4.9%TV parts

3.5%

Optical instruments

4.6%

5.7%

TV parts 1.9%

Optical instruments

2.9%

16

[Source : The Korea International Trade Association]

6.2012 Business Plan - Strategy

Growth & Creative Change

Revenue KRW 5.7tril., Operating Income KRW 452bil. in 2012

Routes Finance

Strengthening Korea - China –Japan routes

Fleet Upgrade

AircraftDebt ratio decrement

Reduced interest costExpansion of long haul routes

Maintain major cargo routes

Fleet Upgrade

Fleets introduction- Passenger +7, Freighter +2

Reduced interest cost

Strengthening of risk management

17

6.2012 Business Plan – Major index

Exchange Rate Fuel Price

1 300F/X rate

$/BBL(MOPS)

1,265

1,200

1,300

$121$126 $125

$110

$125

1,055

1,143

1,091

1070

1,100

$87$90

$95

956927

900

1,000 $81

$70$65

$80

Category 2012(E) 2011 Change(%) Category 2012(E) 2011 Change(%)

2006 2007 2008 2009 2010 2011 2012(E) 2006 2007 2008 2009 2010 2011 2012(E)

F/X Rate(￦/$) 1,070.0 1,107.7 -3.4%

Category 2012 Sensitivity

Mops($/BBL) 125.0 125.6 -0.5%

F/X ￦/$ 10 ↑: Cash flow loss 8.8bil / Translation loss 11.9bil

Fuel MOPS 1$/BBL ↑: Fuel Cost increase 13.7bil. 18

6. 2012 Business Plan – Financial Plan

RevenueOperating Income

(Op. Margin %) Capital Stock Debt Ratio(Borrowings)

(Unit : KRW 100mil.) (Unit : KRW 100mil.)

57,350

( p g )

4,520(7.9%) 9,165

9,759

(594)

550.4%(26,669)

400.2%(28,468)

53,310 3,434 (6 4%)

( g )

(7.6%)31.6%

(+1.4%p)

(594) ( , )(-150.2%p)

(6.4%)

2011 2012(E) 2011 2012(E) 2011 2012(E) 2011 2012(E)

Income Statement Balance Sheet

Category 2012(E) 2011 Change(%) Category 2012(E) 2011 Change(%)(Unit : KRW 100mil.) (Unit : KRW 100mil.)

Category 2012(E) 2011 Change(%)

Revenue 57,350 53,310 7.6%

OperatingI 4,520 3,434 31 6%

Catego y 2012(E) 2011 Change(%)Assets 57,216 52,712 8.5%

Liabilities 45,778 44,607 2.6%

Equity 11,439 8,105 41.1%Income 4,520 3,434 31.6%

(Op. Margin) 7. 9% 6.4% 1.4%p

q y , ,

(Capital Stock) 9,759 9,165 6.5%

Debt Ratio 400.2% 550.4% -150.2%p19

l

6.2012 Business Plan – Operating Plan

Category 2012(E) 2011 Change(%)

Int’l Pax Cargo

Category 2012(E) 2011 Change(%)

ASK (Mil. Km) 40,057 37,471 6.9%

RPK (Mil. Km) 31,542 28,753 9.7%

ASK (Mil. Km) 5,167 4,997 3.4%

RPK (Mil. Km) 4,119 3,923 5.0%

3 2 3 1 2 1%

Maintain major cargo routes in US and EUStrengthening Korea - China - Japan routes

Yield (KRW) 107.8 107.6 0.2% Yield (KRW) 355.2 341.2 4.1%

- Expand existing routes and develop new routes

Develop South America Market- Market expansion through Miami route

g g p- Maintain superiority in China routes- Strengthening competitiveness of Japan routes

Expansion of long-haul routes- Expansion of cooperation in South America- Build new local partnership

Strengthen Asia routes

Expansion of long haul routes- Operating daily flight in all USA - Expansion in Europe routes

Strengthen fleet competitiveness g- Launching Hanoi route and expanding original routes- Vitalizing approved flight rights such as China etc

Strengthen fleet competitiveness- Additional upgrade to Quadra Smartium- Introduction A380 +4(2014~), A350 +30(2016~)

20