Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Asiana employees anxious about job security after cargo unit sale
Asiana Airlines and Korean Air planes are parked at Incheon International Airport, Thursday. Yonhap
By Lee Min-hyung
Sale to foreign carrier to raise concerns over 'outflow of national wealth'
Employees of Asiana Airlines' cargo business are increasingly concerned about job security following the sale of the unit to facilitate Korean Air's acquisition of the country's No. 2 carrier, officials said on Friday.
Asiana’s board of directors approved of the sale of its cargo unit on Thursday, while Korean Air promised to guarantee employment succession. But Asiana's labor union remains skeptical of the sincerity of Korean Air's pledge.
“An internal director of Asiana Airlines abruptly offered to resign just one day before the board meeting, so it is reasonable to suspect that he was under pressure from those in favor of the merger,” Asiana’s labor union said in a statement.
Jin Kwang-ho, the former internal board member of Asiana, stepped down from the post on Oct. 29, without stating a concrete reason. He was known to oppose the sale of the cargo unit and there was speculation that Jin faced mounting external pressure from those in favor of Korean Air's acquisition.
The union stepped up criticism of Korean Air for “exerting apparent influence” on the board of Asiana Airlines.
“We are going to mobilize all possible measures to ensure job security by publicizing the issue,” the union said.
Labor experts said Korean Air should fine-tune details of the agenda with Asiana employees to minimize potential backlash.
“Korean Air is advised to clinch an employment stabilization agreement with Asiana Airlines to alleviate a growing sense of unease from the latter’s employees,” Yoo Il-ho, head of the employment and labor policy team at the Korea Chamber of Commerce and Industry (KCCI), said.
A pedestrian passesf Asiana Airlines' headquarters in Seoul, Thursday. Yonhap
Korean Air also shares that stance, saying that it will keep negotiating with Asiana employees to ensure their job security.
“Even if the boards of Korean Air and Asiana Airlines came to terms with the sale of the cargo unit, the plan cannot make any progress unless we win approvals from overseas authorities,” a spokesman for Korean Air said.
“If all of the remaining authorities in Europe, the United States and Japan approve our revised takeover plan, we will immediately hold detailed discussions with Asiana workers,” the official said.
It remains unclear who will purchase the lucrative cargo business from Asiana.
Four domestic low-cost carriers (LCC), such as Eastar Jet, T’way Air, Air Incheon and Air Premia, are considered to be potential candidates, even if none of them has so far hinted at the possibility of joining the bid due to the ongoing regulatory screening from the European Commission (EC).
Asiana Airlines’ cargo business has served as a stable revenue stream for the carrier for the past five years. The unit generated sales of 779.5 billion won ($589.7 million) in the first half of this year, accounting for 21.7 percent of total sales.
But it appears realistically difficult for one of the LCCs to purchase the cargo unit of Asiana, as its valuation is forecast to reach up to 700 billion won. On top of that, any potential buyer should take on the unit’s debt worth around 1 trillion won.
Given the large size of Asiana’s cargo business, questions are also being raised over whether local LCCs will be able to operate the unit without any difficulty after acquiring it.
According to data from the Ministry of Land, Infrastructure and Transport, Asiana Airlines transported around 22,000 metric tons of cargo in the first half of this year, the second highest following Korean Air. But the gap with the third, Air Incheon, is huge, as the budget carrier transported only around 20,000 tons of cargo during the same period.
This raises the likelihood of Asiana’s cargo unit being sold to a foreign airline, which stands to fuel another controversy over the outflow of national wealth. The scenario is reminiscent of the bankruptcy of Hanjin Shipping in 2017. After the collapse of the Korean container transport firm, Hanjin’s sea routes to North America were dominated by overseas shipping firms.