Korean Air pushes for a government bailout

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Korean Air pushes for a government bailout

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Korean Air in-flight meal carts are parked at the company’s in-flight meal center at Incheon International Airport on Thursday. 80,000 in-flight meals were to be prepared daily in March last year. Now the airline processes fewer than 3,000 due to the impact of the Covid-19 pandemic. [NEWS1]

Korean Air Lines issued a desperate plea for government support Thursday, arguing shared interest and alluding to economic catastrophe if no direct funding is provided.

“The airline industry is a basic industry that supports a country’s fundamental,” the company said in a statement. “Considering that Korea relies highly on imports and exports, Korean industries could collapse if the airline industry falls.”

The company has been appealing for government support since the start of the Covid-19 outbreak, but the company said it has not yet received practical support.

Discount carriers have already received significant aid from the government. State-run banks in February pledged to provide 300 billion won ($267.9 million) to the low-cost carriers.

According to the Korea Civil Aviation Association, the Korean aviation industry stands to lose 6.45 trillion won from February to June.

The collapse of the Korean aviation industry will result in loss of 160,000 jobs and cut 11 trillion won in the country’s GDP, according to estimates from the International Air Transport Association.

Korean Air Lines is working to make internal adjustments so it can weather the storm.

It is discussing with its union the possibility of a leave of absence for all employees, with those with paid leave receiving 70 percent of their wages.

More than half of that cost will be absorbed by the government under the employment maintenance support program.

The airline has suspended or canceled almost all its routes.

As of early this week, the airline was flying to about 15 destinations globally. It said that ancillary businesses are almost completely shut down. The company makes only 2,900 meals per day, down from 80,000 meals a day a year ago. It used to handle in-flight meals for 30 airlines. Now it supports catering for two carriers.

The company is getting some help from the government. Fees for leaving planes on the tarmac have been waived through June, payments for the use of safety equipment is being deferred while un-utilized route rights will not be considered abandoned and forfeited.

The industry is lobbying for more, saying that the benefits that have been given provide very little to airlines that are barely flying at all.

They say they should receive direct support.

The aviation industry in the United States will be allocated up to $58 billion, including $25 billion for passenger air carriers, $4 billion for cargo air carriers and $3 billion for airline contractors. Singapore Airlines obtained $2.8 billion in loans from DBS Group Holdings, while the Chinese government pledged $14.4 billion to the country’s aviation businesses.

Eastar Jet on Wednesday started accepting applications for voluntary retirement to reduce the number of workers by about half. It currently employs 1,683. If the number of volunteers doesn’t meet its expectations, Eastar Jet plans to lay off the required number of workers next month.

The airline plans to cancel leases on 10 of it 23 aircraft.

Eastar Jet last month laid off 80 copilots that were about to become regular employees. In February, it only provided 40 percent of salaries.

All Asiana Airlines employees have been asked to take unpaid leave for 15 days this month. In March, they were forced to take unpaid leave for 10 days.

“It’s essential to maintain the aviation industry because it is an important asset that contributes to the globalization of Korea,” said Prof. Choi Jeong-chul who teaches at the Graduate School of Manufacturing Innovation at Inha University. “Korea will be one country that benefits when the pandemic ends, which will result in increased inbound passengers and higher demand for Korean items that will be delivered by air cargo.”

BY JIN MIN-JI [jin.minji@joongang.co.kr]

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