Asiana Airlines To Reduce Fleet And Cut Routes Amid Financial Difficulty

South Korea’s Asiana Airlines has revealed plans to drop routes and some aircraft in an effort to strengthen its financial performance. The airline is yet to reveal which of its 87 routes and 83 planes will be affected. However, the major South Korean airline operates six A380’s, an aircraft which has previously proven unprofitable for other carriers.

According to Reuters reporting, the cuts were outlined in a letter to Asiana Airline employees penned by CEO Han Chang-Soo, who said:

Though it seems market concern about our airline is dissipating, we need to restore trust through bold innovation.

Will Asiana Airlines ground its A380s?

The letter did not appear to detail the exact cuts and, at the moment, there is no specific indication that Asiana Airlines will retire its A380s. But, just a few weeks ago Qatar Airways confirmed plans to retire its entire fleet of A380s on their 10th anniversary. Air France will also drop half its fleet of the super jumbo.

Sales of the 600-seater jet never really took off, and those who did buy it struggled to fill the giant cabins and thus to cover costs.

The Airbus Family Formation. Including the A380
The Airbus Family Formation Including the A380 Image Source: Airbus

Asiana Airlines’ A380 routes include Seoul to Hong Kong, New York, and Sydney. Cirium’s Fleets Analyzer reveals the airline also runs 25 Airbus A320s and six A350s, and has orders pending for an additional 24 A350s. Equally, there is no news yet as to whether future orders for Asiana Airlines will be affected.

Pressure on profits and stocks

The South Korean airline is reacting to pressure to improve its financial situation. Its co-CEO resigned last week, and its parent company Kumho Asiana Group is currently seeking financial support from a creditor. This, after its auditor refused to sign of its latest financial reports, lead to a pause in the trading of Asiana Airlines’ shares. The stock is at a five-month low, losing 13% just before the halt in trading began.

Asiana Airlines Airbus A330-323 at Seoul Incheon International Airport
Asiana Airlines Airbus A330-323 at Seoul Incheon International Airport. Image Source: Wikimedia Commons/Asiana Airlines

Asiana Airlines is considering the sale of assets and internal restructuring in further efforts to cut costs and turn a profit. The company had forecast an operating profit of $158 million for 2018, but net losses emerged at $26 million, down 88% on the previous year. The losses were disclosed after the disagreement with the auditor and the co-CEOs resignation. Kumho Asiana Group chairman Park Sam-Koo also resigned last week.

A committee is being established by Asiana Airlines to pursue the changes. It will also be working with the airline’s main creditor, Korea Development Bank, which expects turnaround plans.

Any sale of assets could boost short-term profitability and the company’s credit. According to Nasdaq an unnamed South Korean industry analyst has said:

Selling off their jets to leasing companies might be an option for Asiana, but it takes quite some time to conclude deals.

If South Korea’s Asiana Airlines is considering selling A380s it may find it’s not the easiest of aircraft to sell. Airbus announced in February 2019 that it would scrap production of the A380 for this very reason, although it still remains somewhat popular with wet leasing ompanies.

4 comments
  1. Cut the overcapacity and sell the A380’s to British Airways since they have Rolls Royce engines, as this is what BA is looking for. Asiana can then re-adjust the aircraft schedule and deploy A330, A350 & B777 on the routes served by the A380’s, this should lead to lower operating costs, higher load factors & higher profitability.

  2. Cutting the A380’s overcapacity:

    An other way of cutting the overcapacity in the A380’ and their superfluous amount of seats, is refurnishing them in a slightly Business Class minus way, with 250 seats and some social lounging spaces in the aircraft.
    The gain in less MTOW of 30 000 kilo’s will enable the aircraft for ultra long haul flights featuring an appetising level of passenger comfort.

    At today’s about shatter value of these aircraft, ticket prices can be more moderate, therefore acceptable to those who want to travel with some pleasant comfort. For sure the less price sensitive travelers segment in world markets.

    The A380’s should be owned by a “Boutique airline mutuality”, operating the aircraft for a conglomerate of partners cooperating in one of today’s Carrier Alliances, and so utilising their mutual marketing strength filling the seats.

    As there are no more than a handful viable routes, flight frequencies on the routes are limited to one or twice a week.
    The solution therefore only marginally accommodates today’s huge A380 surplusage.

    Some (arbitrary) routes:
    Europe: London, Amsterdam, Frankfurt, Stockholm Australia: Perth, Melbourne, Sydney
    Australia: Perth, Melbourne, Sydney America’s Westcoast: Montreal, New York, Miami
    Asia: Delhi, Hongkong, Shanghai, Being America’s Westcoast: Montreal, New York, Miami
    Europe: London, Amsterdam, Frankfurt, Stockholm Pacific: Sri Lanka, Maldives, Seychelles, Bali

    But this time saving and higher service new product might harm participating carriers profitability on their own network routes.
    On the other hand they are selling the product themselves and it’s only a weekly frequency, they’ll sell a lot of extra one way tickets on this service and accompanying returns on their own planes.

    This idea is initiated in the perspective of an ongoing declining of the low cost market caused by next year’s foreseen new worldwide recession.

    So it’s not a good advice for BA buying at her own those superfluous A380’.

    1. Anton Schiere You seem to suggest Montreal (instead of mentioning Toronto) as one of those cities that would be viable to have routes served with A380 on your “Boutique Airline Mutuality”. As Montreal airport had 19Million passengers last year compared to Toronto’s 49.5Million, would it be right to guess you are based in Montreal or had some special links with that city, and thereby perhaps even just a little bit biased towards Montreal? Nudge, nudge, wink, wink!!!

  3. Asiana will retain the A380 and make them serve long haul routes. They will drop 747s and 767s instead.
    Also, can’t you just stop blaming A380 on financial problem???

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