Could Korean Air Be Wiped Out By The Coronavirus?

Yesterday, South Korea’s flag carrier sent out a stark warning to its employees warning of the economic dangers posed by the coronavirus outbreak and the mounting pressure.

South Korea is one of the countries worst affected by coronavirus-related travel restrictions and South Korea’s airlines have found themselves in a particularly vulnerable position, particularly Korean Air.

As you may have seen, yesterday has shown just how much potential coronavirus has to damage the global economy. Stock markets around the world have suffered sharp falls and there was gigantic price shift for crude oil.

As the past couple of months have shown, the aviation industry has been particularly exposed to the negative effects of the coronavirus outbreak. Reports by Skift yesterday reveal just how much trouble one Asian flag carrier could be in.

Korean Air In Trouble

South Korea has seen a massive reduction in international air travel across its borders. The country’s largest airline and flag carrier, Korean Air, has lost around 80 percent of its normal capacity due to flight cancelations.

The airline reportedly released an internal memo to staff which explained the potential effects the ongoing outbreak could have on the airline

In the memo, Korean Air’s president, Woo Kee-hong, said:

“if the situation continues for a longer period, we may reach the threshold where we cannot guarantee the company’s survival.”

The reduction in demand as a result of the coronavirus outbreak has been so severe that the airline has temporarily removed around 100 of its 145 aircraft (69%) from active duty. 

It’s not just Korean Air’s international flights which have taken a battering. Two weeks ago, Korean Air announced it would be canceling all flight to Daegu until the end of March. Although Daegu is South Korea’s fourth-largest city (2.5 million residents), it has the highest number of coronavirus cases in the country, meaning air travel to the city has been effectively stopped completely.

To put that into perspective, the most populated cities in the USA are:

  • New York City: 8.4 million
  • Los Angeles: 4 million
  • Chicago: 2.7 million
  • Houston: 2.3 million
  • Philadelphia: 1.6 million
  • Phoenix: 1.5 million

In other words, that would be similar to saying “…no flights to/from Chicago or Houston.”

FINAL STAMP

Korean Air is by no means the only airline which has been severely affected by coronavirus outbreak. Asian airlines have been hit particularly hard by travel restrictions, but airlines all over the world have all felt the negative effects in some way or another.

Over the past few weeks, we’ve seen Cathay Pacific cut 75% of their flights, Qatar ban 14 countries, Hong Kong Airlines eliminate 400 jobs, Singapore Airlines eliminate 670 flights, Flybe Airlines totally collapse, South by Southwest cancel their festival, and Italy place the entire country on lockdown.

Airlines generally fund todays operation from the money brought in with future bookings. If there are little to no future bookings, airlines have a major challenge on their hands.

The UK regional airline Flybe was the first airline casualty of coronavirus and I predict it probably won’t be the last. Keep your eyes on Air AsiaX, Alitalia, Hong Kong Airlines, Korean Air, Norwegian, and Mexico’s Interjet, to see if they will make it.

Has the coronavirus affected your travel plans?

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