South Korean carriers are battling the coronavirus pandemic by placing staff on leave and looking to strengthen their balance sheets.
Asiana Airlines announced on 7 April it is increasing the limit on its credit lines with the Korea Development Bank and the Export-Import Bank of South Korea by a total of W300 billion ($250 million).
Korean Air said on 7 April it will effectively be closed for 6 months, from 16 April to 15 October, to cope with the “deteriorating business environment” and will suspend staff based in South Korea.
It adds that it will strengthen the company’s balance sheet by selling non-essential assets and will consult its board on plans to raise capital.
Korean says only personnel deemed essential for each department will remain at their posts, and over 70% of its workforce will be on leave. Executive staff and vice-presidents will also take pay cuts of between 30% and 50% while the crisis continues.
Likewise, Asiana has asked all 10,500 employees to take unpaid leave for 15 days in April, up from 10 days of unpaid leave in March, while executives will take a 60% pay cut, local news agency Maeil Business News Korea reports, citing a statement from the carrier.
Budget carrier Eastar Jet is planning to lay off 700 out of some 1,600 employees and is in talks to reduce its fleet by 10 aircraft, according to a 2 April report by Reuters that cites a company spokesperson.
To help its airlines tide over the coronavirus pandemic, the South Korean government has so far suspended airport slot rules and waived or reduced airport charges, landing fees and ATC charges. It has also provided W300 billion in financial support for low-cost carriers.
In a 3 April estimate, IATA expects the country’s passenger numbers to fall 40% this year, resulting in lost revenue of $8.4 billion.
The association said on 26 March that it wrote to the heads of state in 18 Asia-Pacific countries, including South Korea, to appeal for emergency support for the region’s airlines.
“For airlines, it’s apocalypse now,” IATA director general Alexandre de Juniac said in that statement.
“And there is a small and shrinking window for governments to provide a lifeline of financial support to prevent a liquidity crisis from shuttering the industry.”