Senior executives of South Korea's Asiana Airlines have offered to return large portions of their yearly salaries. This is part of an emergency plan to help the company out of financial trouble.
Salary cuts and resignations
As reported by Flight Global, in a move to help the company out of a rough spot, the Asiana Airlines CEO, Han-Chang Soo, has pledged to repay 40% of his salary. He is joined in the effort by other senior executives and division team leaders who will be returning 30% and 20% of their salaries respectively.
The entire senior leadership team has submitted a collective resignation letter. However, this is perceived as a largely symbolic gesture and the resignations will at the very least not be accepted right away.
The refund of salaries is part of the company’s emergency business management plan that was outlined in a letter to its employees. The plan also includes 10 days of unpaid leave for all employees due to the reduction of routes in and out of China. The requested leave includes ground crew, cabin crew and maintenance workers.
Continuing crisis management
Asiana Airlines has been in dire financial straits for some time, its debt ratio reaching a staggering 900%. In 2019, it implemented efforts to strengthen its performance by dropping a number of routes from its timetable and letting go of some of its fleet.
Prior to the schedule reduction, in March 2019, Asiana’s co-CEO Park Sam-koo resigned after failing to secure auditors’ sign-offs on the company’s 2018 annual report. The carrier had to revise its accounts and disclose a bigger annual loss to gain the approval of the auditors.
Coronavirus further reduces revenues
Recent global events have conspired to knock the already struggling airline down a few more pegs on the revenue ladder. Due to a drop in air traffic caused by the coronavirus, Asiana has in the past two months been forced to further reduce its routes to China by 79%, and to Southeast Asia by 25%.
The number of coronavirus cases have increased rapidly in South Korea, and it is now the worst-hit area outside of mainland China. On Monday, after the number of reported cases rose to 763, Asiana along with Korean Air, decided to halt all flights to Daegu. Daegu is the country’s fourth-largest city, and the one with the highest number of coronavirus infected.
Knight in shining aluminum
Late last year, Asiana’s current major stakeholder Kumho Industrial signed a $2.2 billion deal with giant Hyundai Development Company for a controlling interest of the airline. According to the Korea Herald, HDC said that despite the latest struggles, there will be no change in plans.
This injection of funds could see Asiana begin to modernize the older fleet it has been forced to operate. Perhaps in time, it could even take up the fight with Korean Air for the number one spot in the country. If this will be under entirely new management remains to be seen.