They say not for now... Asiana workforce restructuring after April next year?

The headquarters of Kumho Asiana in Jongno-gu, Seoul, where the acquisition plan of Asiana Airlines by Hanjin Group was discussed at the Ministerial Meeting on Strengthening Industrial Competitiveness on the 16th. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Kangwook Cho] Amid controversy over employment issues related to Korean Air's acquisition of Asiana Airlines, there are prospects that workforce restructuring could begin after April next year. Currently, with support from the Industrial Stability Fund, the companies must maintain over 90% employment for six months, but the employment maintenance deadline ends in early April next year. Although the Korea Development Bank, which is promoting the integration of the two airlines, has firmly stated that there will be no artificial restructuring, workforce restructuring is likely to become a more contentious issue in the first half of next year when integration efforts intensify.

According to financial sources on the 17th, Asiana Airlines received 240 billion KRW from the Industrial Stability Fund on the 24th of last month. This followed the collapse of HDC Hyundai Development Company's acquisition of Asiana Airlines and the decision in September to provide up to 2.4 trillion KRW to Asiana Airlines to resolve liquidity crises.

The fund support conditions include maintaining employment of at least 90% of workers for six months from the start date of fund support. However, since situations may vary slightly by industry, 90% serves as a guideline and can be adjusted depending on the sector.

Accordingly, Asiana Airlines must maintain over 90% employment for six months starting from the agreement date of October 7. This means large-scale restructuring is unlikely to occur until early April next year.

However, the situation changes once the employment maintenance period ends.

Currently, Korean Air has a total of 18,000 employees, and Asiana Airlines has 9,000, with overlapping personnel estimated at around 800 to 1,000 in indirect sectors such as management. The market expects that once Korean Air begins a paid-in capital increase by the end of March next year to secure funds for acquiring Asiana Airlines, integration efforts will accelerate, making route and workforce restructuring inevitable. Especially considering that about 70% of domestic employees at both airlines are currently on leave, large-scale layoffs after the acquisition are a plausible scenario.

Korean Air currently operates 29 routes, including 14 to the Americas and 15 to Europe, while Asiana Airlines operates 11 routes, including 5 to the Americas and 6 to Europe. Except for one or two, Asiana Airlines' routes to the Americas and Europe overlap with Korean Air's. Since declaring an emergency management state in 2015, Asiana Airlines has trimmed some routes to Russia, India, and China to improve its financial structure, but still incurs substantial operating costs on unprofitable long-haul routes. Therefore, creditors are reportedly discussing and reviewing plans to consolidate and rationalize the 'profitable' routes to the Americas and Europe operated by both airlines.

For this reason, the labor unions of Korean Air and Asiana Airlines strongly oppose the integration decision, arguing that acquisitions within the same industry could cause employment insecurity due to overlapping personnel.

In response, the government is considering ways to utilize surplus personnel through new route development. Kim Sang-do, Director of Aviation Policy at the Ministry of Land, Infrastructure and Transport, said, "Indirect personnel such as management support may be subject to adjustment, but considering retirements and annual natural attrition, the issue of overlapping personnel could be resolved within a year."

Choi Dae-hyun, Vice President of the Korea Development Bank, said, "Both airlines have significant annual natural attrition, and considering the personnel needed for integration and new business initiatives, large-scale workforce reductions are unrealistic," adding, "Therefore, we believe there will be no artificial restructuring, and we have received a commitment on this from the Hanjin family."

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