Massive Workforce Shift Due to Merger... Challenges Also Pile Up [Birth of Mega Carrier]

Workforce Restructuring Unavoidable... Anxiety Rises Over 'Demotion'-Style Transfers
Financial Burden Must Also Be Eased by Consolidating Overlapping Routes
Mileage System Integration... Concerns Over Consumer Backlash

Although the four-year merger has concluded, there remain numerous challenges to address. Attention is focused on whether issues such as employee integration, route and fleet system organization, and debt management can be resolved with minimal disruption.

According to industry sources on the 29th, the merger of Korean Air and Asiana Airlines is expected to trigger a chain of personnel movements not only between the two companies but also among their affiliated low-cost carriers (LCCs) such as Jin Air, Air Seoul, and Air Busan. While artificial restructuring has been denied, anxiety among employees over workforce reorganization is growing. Some Asiana Airlines cargo pilots have been assigned to Air Incheon. This move came as the cargo division was sold to Air Incheon, resulting in a direct transfer. However, the status of Boeing 767 pilots remains undecided, as this aircraft type is also used for passenger flights.

Even pilots, considered the most stable positions, are feeling uncertain, and regular employees are expressing regret and anxiety. Workforce adjustments are inevitable if a large number of Korean Air employees transfer over. It is reported that employee attrition has already been significant. Korean Air employees are equally uneasy. Rumors that the criterion for moving to Asiana Airlines is "low performance" have increased fears of being "demoted." Employee B from Korean Air lamented, "Even though we are in the same industry, suddenly being mixed into a company with a distinctly different culture is worrying, and being labeled as a low performer is frightening."

In response, a Korean Air official explained, "Personnel dispatch is unavoidable, but no fixed criteria have been established yet." Korean Air Chairman Cho Won-tae has also emphasized, "There will be no artificial restructuring after the merger."

Resolving overlapping routes is another challenge. Korean Air and Asiana Airlines have many overlapping long-haul routes, such as to New York, with similar flight schedules. Considering the routes of their subsidiary low-cost carriers (LCCs), more than 60 international routes overlap. Korean Air is expected to prioritize more densely scheduling flight times rather than reducing routes. This approach aims to increase consumer choices and expand foreign transfer demand.

The integration of mileage programs also needs to be addressed. As of the end of the third quarter this year, the unused mileage of both companies amounts to approximately 3.5346 trillion KRW. Since the mileage accumulation rates and values differ between the two companies, a simple unified integration could lead to consumer dissatisfaction. Korean Air plans not to drastically change the mileage operation methods of the two airlines initially. Since they will operate as independent companies for the next two years, unused mileage during this period will have its conversion rate determined through a review by the Fair Trade Commission.

The debt issue, which was a weakness for Asiana Airlines, is expected to gradually improve after the merger. As of the third quarter this year, Asiana Airlines' debt ratio stood at 1846.9% on a consolidated basis. If Korean Air participates in Asiana Airlines' paid-in capital increase to provide funds and utilizes the proceeds from the sale of the cargo division, the debt ratio and interest expenses are expected to decrease significantly. Park Soo-young, a researcher at Hanwha Investment & Securities, analyzed, "If this funding is used to repay borrowings and perpetual bonds, the debt ratio will drop to 683%. Although it may not be immediately visible, quarterly performance improvements due to industry restructuring can be expected."