Korean Air Lines warns that the global coronavirus pandemic threatens its very survival after South Korea’s outbreak saw global restrictions on travel to and from South Korea.
Woo Kee-hong, Korean Air’s president, said earlier this week that the carrier had cut more than 80 per cent of its international capacity because of the travel restrictions, according to Reuters. This compares with the 18 per cent reduction made during the 1997-1998 Asian financial crisis.
“We can easily imagine the severity of the crisis we are facing in comparison. And what is more daunting is that the situation can get worse at any time and we cannot even predict how long it will last,” Woo said in a memo to employees.
Korean Air has grounded nearly 100 of 145 passenger aircraft, Woo says, adding that measures to cope with the situation do far include deferring investments, reducing operational expenses and encouraging employees to take voluntary leave.
“But if the situation continues for a longer period, we may reach the threshold where we cannot guarantee the company’s survival,” he said in the memo.
The Korea Centers for Disease Control and Prevention reported 165 new coronavirus cases early last week, bringing the national tally to 7,478 in one of the most severely affected countries outside mainland China.
Delta Air Lines, just last month spent an estimated USD 50 million to raise its stake in Korean Air’s parent company, Hanjin KAL, to 11 per cent from 9.21 per cent.
Korean Air is a codeshare partner with Delta and the two airlines have a joint venture which saw Delta shift its Asia hub from Tokyo’s Narita airport (NRT) to Seoul’s Incheon (ICN).