No massive layoffs: Korean Air
Hanjin Group Chairman Cho Won-tae responds to reporters' questions on the sidelines of his participation at an industry event held in downtown Seoul, Wednesday. Yonhap
By Kim Yoo-chul
By Kim Yoo-chul
Hanjin Group Chairman Cho Won-tae said Wednesday there will be no layoffs or increases in airfare prices after Korean Air acquires the struggling Asiana Airlines.
“I can say Hanjin Group has no plans to initiate layoffs as the group will use the acquisition of Asiana Airlines as an opportunity to embrace all employees affected by the takeover as Hanjin's family,” Cho told reporters on the sidelines of his participation at an industry event held in downtown Seoul.
The Korea Development Bank (KDB), the major creditor of Asiana, decided to invest 800 billion won into Hanjin KAL, the parent company of Korean Air, in a move to back up Korean Air's takeover of the No. 2 carrier. The deal, if it happens, will provide a lifeline for Asiana, which employs 9,000 employees. But concerns are that Korean Air will launch large-scale restructuring to improve the profitability and efficiency of the company as the aviation industry has been hit particularly hard by the COVID-19 pandemic.
“Given the number of flight routes that both Korean Air and Asiana are operating, it's true to say that there are lots of employees whose given roles overlap. Despite this, I can say given the chances of business expansion, we have the ability to assign them to different tasks,” Cho told reporters, adding he will meet with representatives of Asiana's unions soon for thorough discussions.
The KDB's investment in Hanjin KAL will help Korean Air become the largest shareholder of Asiana Airlines, while the KDB will hold a 10.66 percent stake in Hanjin KAL. Some critics say the banks decision is due to it favoring the current Korean Air chief, who is involved in a management dispute with his sister Cho Hyun-ah.
“I don't think I am receiving preferential treatment from the KDB. Yes, the KDB approached me over the idea of acquiring Asiana and I said yes. The takeover plan is the result of thorough discussions with the KDB and also based on a mutual consensus,” Cho told reporters.
Regarding possible opposition to the plan by the Cho Hyun-ah-led coalition, the Korean Air chief said he doesn't have any plans to respond to calls from the group to cancel the acquisition plan.
Right after the KDB announced it would back Korean Air, the coalition vowed to bring the issue to local courts aimed at nullifying the plan. Activist shareholder the Korea Corporate Governance Improvement Fund (KCGI) is part of the coalition, which has amassed 45.24% of the voting rights in Hanjin KAL, and opposes the plan. It argues that Korean Air could improve operations by naming professional executives to run the company, rather than have members of the owner family, according to officials.
Cho Won-tae and his supporters, believed to include Delta Air Lines, currently own 37.35 percent of Hanjin KAL, without counting the KDB's possible acquisition of shares.