Korean Air (KAL) crowned a disastrous year in which its reputation was further muddied by losing another aircraft in a crash near London Stansted Airport.

The accident on 22 December involved a Boeing 747-200 freighter and killed all four people on board. It was the airline's third hull loss in 1999 and its fifth since August 1997.

It could not have come at a worse time for the airline, which in October became the subject of a tax-evasion scandal and which a month later saw chairman Cho Yang-ho arrested for alleged tax evasion and embezzlement.

Cho's arrest came just days after the airline was hit with new operational sanctions by South Korea's Ministry of Construction and Transportation, barring KAL from inaugurating new international services for one year and from operating to Guam or Saipan for two years. The sanctions were imposed after the US National Transportation Safety Board concluded in a report that a 1997 crash on Guam of a KAL Boeing 747-300 was in part due to pilot error.

Conspiracy theorists in South Korea charge privately that the tax evasion revelations and the operational sanctions are attempts by the government to show that it is being tough on the country's conglomerates to force much-needed change. KAL is controlled by the Cho family through its Hanjin shipping conglomerate and many believe South Korean president Kim Dae-jung wants the family to relinquish control.

But whatever the government critics say, there is no denying that the airline has had a disastrous two years. The latest round of trouble for KAL has come as the airline thought many of its problems were behind it.

In April, after a Boeing MD-11 freighter crash near Shanghai, partners Air Canada, Air France and Delta Air Lines suspended parts of their codeshare arrangements with KAL. At the same time, the US Department of Defense (DoD) advised thousands of US military personnel stationed in South Korea against flying with KAL.

The airline spent months convincing its partners that it was investing the necessary amounts of time and cash to improve its operation through new training systems and other positive changes. By early November the DoD had lifted its advisory and KAL's airline partners were said to have been preparing to reinstate suspended agreements.

In October, airline sources said KAL had won a place in the new multilateral alliance of Air France, Aeromexico and Delta, a branding for which was expected early this year.

In the wake of the latest crash, senior KAL officials are known to have met representatives from the three prospective partners. Airline sources say the parties are "planning strategy", although it is unclear if KAL's latest accident will delay the formal launch of the alliance.

Source: Airline Business