Reducing Size and Converting Passenger Planes... Korean Air's Fight for Survival

Closure of Europe and Southeast Asia Regional Headquarters... Organizational Slimming
Passenger Seats Removed for Dedicated Cargo Aircraft

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] Korean Air is promoting organizational slimming and management efficiency to overcome the management difficulties caused by the novel coronavirus disease (COVID-19). While closing some overseas regional headquarters that have been criticized as inefficient, the airline is also actively pursuing plans to convert passenger aircraft into cargo planes due to the prolonged slump in passenger demand.

According to industry sources on the 20th, Korean Air recently closed its European (Paris, France) and Southeast Asia (Kuala Lumpur, Malaysia) regional headquarters through organizational restructuring. As a result, Korean Air's overseas regional headquarters have been reduced to four locations: Americas (Los Angeles, USA), China (Beijing), Commonwealth of Independent States (CIS, Moscow, Russia), and Japan (Tokyo).

The European and Southeast Asia regional headquarters have been reported to have an inefficient structure as they cover multiple countries with different environments within the region. In preparation for the closure of these regional headquarters, Korean Air plans to establish and operate ▲a global sales support organization and ▲a 24-hour passenger transport support center to facilitate collaboration between headquarters and local branches.

A Korean Air official explained the recent restructuring as "a change aimed at organizational slimming to respond quickly and efficiently to changes in the management environment," adding, "Instead of the multi-country European and Southeast Asia regional headquarters, we are establishing a work system where headquarters and branches collaborate directly to create a swift and simplified decision-making system."

Separately, Korean Air is also pursuing plans to remove seats from some passenger aircraft and convert them into cargo planes. This is to target the air cargo market, where rates have surged due to a global reduction in passenger flights, while it will take considerable time for passenger demand to recover.

An industry insider said, "This year, the entire aviation industry will seek self-help measures in some form, but it will be difficult to endure from around the end of the year," adding, "If the extension of employment retention subsidies is not pursued, restructuring will be unavoidable."

This content was produced with the assistance of AI translation services.