Korean Air’s president is concerned that the airline could be forced out of business if the global coronavirus crisis persists for much longer.
Woo Kee-hong told employees in a memo seen by Reuters that 80% of its capacity has been cut because of global travel restrictions and scores of countries banning flights from South Korea.
Already, European regional airline Flybe has had to cease operating because the impact of coronavirus proved too much for the business, which was already struggling.
The Asian financial crisis in 1997 resulted in a 18% capacity cut for Korean Air.
Woo said: “We can easily imagine the severity of the crisis we are facing in comparison. And what is more daunting is that the situation can get worse at any time and we cannot even predict how long it will last.”
Korean Air has grounded around 100 of its 145 jets in addition to cutting costs and asking employees to take voluntary leave. This week Korean Air has removed 44 routes from its schedule this and has, like Qantas, China Southern and Lufthansa, dropped its A380s in favor of smaller aircraft
“But if the situation continues for a longer period, we may reach the threshold where we cannot guarantee the company’s survival,” Woo added.
South Korea is one of the areas to have been hit hardest by the travel restrictions. The country has reported well over 7,000 cases – roughly the same number as the entirety of the Middle East region.
The International Air Transport Association (IATA)’s latest worst case scenario prediction is that the airline industry could face a hit to its revenues of up to $113 billion, most of which will likely be felt in Asia.
Airlines in South East Asia have already lost out on hundreds of millions of dollars’ worth of revenues.
Analysts think carriers in Asia and those without large cash reserves or who have been involved in a price war are at greatest risk of going under.