Korean Air Also Enters 'COVID-19 Emergency Mode'... All Executives to Forfeit Salaries Starting April

50% Vice President Level, 40% Executive Director Level, 30% Managing Director Level
"Strategizing with the possibility of continued impact until the end of this year in mind"

On the 9th, the Korean Air ticketing counter at Terminal 2 of Incheon International Airport is quiet. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Yoo Je-hoon] As the domestic aviation industry faces a crisis due to the novel coronavirus infection (COVID-19), Korea Air, the industry leader, has effectively entered an 'emergency mode' by deciding to have its executives return part of their salaries.

Korea Air announced on the 25th that starting from April, executives at the vice president level and above will return 50% of their monthly salary, senior vice presidents 40%, and managing directors 30% until the business situation normalizes.

Previously, national airlines had consecutively implemented executive salary returns as a measure of 'leading by example' amid the worst business environment caused by the boycott of travel to Japan last year and the COVID-19 outbreak earlier this year. With Korea Air joining this effort, all airline executives are now participating in salary returns.

Korea Air is facing its greatest crisis since its founding due to the contraction in air travel demand caused by COVID-19. Out of 145 passenger aircraft, about 100 are grounded, and the company is implementing voluntary leave and furlough systems for flight (foreign) and cabin crew. To respond to COVID-19, Korea Air has established a company-wide response system by forming an emergency countermeasure committee and a practical task force (TF).

Additionally, to strengthen profitability amid the downturn, Korea Air is activating business activities by transporting air cargo using the cargo compartments of idle passenger aircraft. A Korea Air official explained, "Internally, we are planning management strategies considering the ongoing impact of COVID-19 not only during the peak season in August but also through the end of the year," adding, "The idea of salary returns as a measure of leading by example has been continuously discussed, and Chairman Cho Won-tae has accepted it after much deliberation."

Meanwhile, the management rights dispute tightening around the Hanjin Group seems to have passed a critical point. The court dismissed all injunction requests filed by the shareholder coalition (known as the '3-party alliance') ahead of the Hanjin KAL regular shareholders' meeting scheduled for the 27th, aiming for group normalization. As a result, voting rights for 3.20% of shares held by Bando Construction have been suspended, while voting rights of Korea Air's self-insurance and employee association (3.7%) remain allowed as before, expanding the visible share gap between Chairman Cho's side (approximately 37.40%) and the 3-party alliance (28.78%) to around 8 percentage points.

However, the possibility of a prolonged battle is increasing. The 3-party alliance announced the previous day that it had increased its stake in Hanjin KAL to 42.13%, up 2.01 percentage points from before.