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A strike by union pilots of Asiana Airlines Inc. started to take a heavy toll on the carrier's international passenger flights Wednesdau as the walkout continued for a 12th day.
Asiana canceled 18 international flights on seven routes scheduled from Wednesday through the end of July, the company said in a statement.
Asiana had been determined to not let the strike affect international passerger operations. But a wider disruption to include international flights will be a major setback for the country's second-largest carrier because international passenger operations account for more than 60 per cent of its business, analysts said.
Asiana canceled five flights to Sydney, four to Los Angeles, two each to Japan's Takamatsu and Miyazaki, China's Guilin and Chongqing, and India's Delhi. The flights to those destinations were suspended either because it is a frequently run route or because pilots capable of flying the aircraft used on the routes are unavailable, the carrier said.
"The strike is stretching into the long term and we had to cancel some long and short-distance routes because of the problem with the supply of pilots," said Asiana spokeswoman Kim Su-jung. "Bracing for the possibility the walkout will continue until August, we are now rearranging next month's flight schedule and are scheduled to announce the details this weekend."
All of the airline's cargo services will remain grounded until the strike ends and about 300 flights to the southern resort island of Jeju will also be canceled through to Aug 7, the company said.
Since the pilots' union walked off the job on July 17 demanding better working conditions and participation in management decisions, Asiana has dropped more than half of its domestic flights and all of its four cargo flights per day, but has maintained service on its international routes using non-union and foreign pilots.
"Economic damage will snowball as the strike now has begun affecting international flights," said aviation analyst Ko Min-je at Hanwha Securities Co. "International flight operations are the most profitable business for Asiana and the carrier generates nearly 50 per cent of its revenue in July and August, the highest season of the year."
Asiana has so far lost an estimated 33 billion won (US$33 million) in sales from the strike and forecasts it loses an additional 3 billion won (US$3 million) in sales every day. This translates to a net loss of 600 million (US$600,000) to 700 million won (US$700,000) per day, according to Korea Investment & Securities Co.
With negotiations between labor and management suspended since Friday, Asiana Vice President Joo Jae-hong traveled Wednesday to Mount Songni in North Chungcheong Province where about 400 striking pilots were assembled to persuade them to return to work.
The government has said it will intervene in the strike if it feels the walkout is inflicting "excessive" damage on the public and the national economy.
The strike has threatened exports this month, blocking overseas shipments of time-sensitive goods such as semiconductors.
Asiana has a 21.4 per cent share of Korea's air cargo market, while its bigger rival, Korean Air Co., controls 50 per cent and foreign carriers 28.5 per cent.
Air freight amounted to $83.2 billion in 2004, accounting for about 33 per cent of export deliveries. High-value items such as semiconductors, mobile phones, liquid crystal displays and computers make up the bulk of air cargo.
The Ministry of Commerce, Industry and Energy estimates that Korea may see only single-digit growth for exports in July - following double-digit growth in the previous two months - as they are bogged down by the strike. The nation ships nearly 40 per cent of exports during the last 10 days of each month.
Last week, Asiana reported a net loss of 8.6 billion won ($8.6 million) in the second quarter due to high fuel costs.
The operating loss was 1.2 billion won (US$1.2 million). Sales rose 3.5 per cent from the previous quarter to 751.3 billion won (US$750 million) for the April-June period, the company said in a regulatory filing.
For the first half of the year, Asiana's net profit plunged 78.2 per cent from a year ago to 23.4 billion won (US$23 million) despite a 6.8 per cent increase in sales to 1.48 trillion won (US$1.48 billion).
In April, Asiana said its sales should rise to 3.18 trillion won (US$3 billion) in 2005 from last year's 2.99 trillion won (US$2.99 billion) on the back of rising demand for air travel. It targets an operating profit of 175.2 billion won (US$175 million) this year, up 23 per cent from 2004's 142.3 billion won (US$142 million).
By Kim So-young The Korea Herald Publication Date : 2005-07-28
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