Asiana Airlines President Kim Soo-cheon said the national flag-carrier will aggressively come up with steps to cope with losses stemming from its aviation routes to China. It has been suffering from China’s retaliation against Korea’s installation of the U.S. Terminal High Altitude Area Defense.
President Kim made the remarks at the Asiana Airlines headquarters in Osoe-dong, Seoul, on March 31 shortly after the ending of a shareholders’ meeting of the airliner. “As external and internal uncertainties stemming from China’s retaliation steps are rising, a lot of hardships are expected, and we’re going to aggressively explore several opportunities and chances to make up for losses of Chinese air routes,” he said.
Asiana Airlines is readjusting Chinese routes to Southeast Asian and European routes, Kim said. Asiana Airlines has decided to launch a charter flight to Venice, Italy and to expand flights to other European routes, he added. There are many options to handle current Chinese issues, said President Kim, adding that he was still optimistic. He noted the challenges the company experienced in 2015 because of the Middle East Respiratory Syndrome (MERS) epidemic, and how they coped.
Asiana Airlines aims to chalk up 300 billion won in operating profit in 2017, a 16.7 percent surge from 157 billion won in 2016. The airliner’s 2017 target in operating profit is in contrast with Korean Air, which has lowered the 2017 operating profit target to 840 billion won, a 25 percent plunge from the figure of the 2016. “The target, set in the fourth quarter of 2016, was not factored in the Chinese variable, but it won’t change,” he said. President Kim said the airliner will muster its capabilities to realize the target.
Asiana Airlines plans to strengthen strategies to differentiate itself from rivals by making the most of A350s the airliner will introduce starting in April. “A350 is characterized with comfortability. Korean Air’s B787s made their debut in 2011, and the A350s, released in 2014, are their newest planes. Passengers aboard A350s can use wireless internet and roaming services.
The airliner is considering establishing joint ventures with foreign airliners, President Kim said. Establishment of joint ventures is a major trend, Kim said. He said he cannot disclose details. He plans to keep paying attention to that matter.
Asiana Airlines Records 257 Billion won in Operating Profit in 2016
Asiana Airlines, which hit a major slump between 2012 and 2015, chalked up 257 billion won in operating profit last year. It is the first time since 2011 that the national flag carrier surpassed 200 billion won in operating profit. The airliner saw the rate of operating profit stand at 4.4 percent, five-year high. Asiana Airlines President Kim Soo-cheon said, “Asiana Airlines had improved business performances thanks to favorable crude oil prices, foreign exchange rates, market demand, and higher profitability through restructuring. The airliner marked a turning point following a long tunnel.”
President Kim is upbeat, saying Asiana Airlines is predicted to post 300 billion won in operating profit and see the operating profit rate rise to 5.2 percent this year.
The restructuring of the airliner, which began last year, will last until 2018, President Kim said. The airline industry is faced with an unprecedented crisis due to upheaval caused by the growth momentum of low-cost carriers (LCCs), said Kim, adding that the airliner will set 2017 as a year in which it will mark a milestone in its restructuring drive.
At a meeting with reporters at Asiana Airlines headquarters in Osoe-dong, Seoul, on Feb. 16, Kim stressed the normalization of management through restructuring. He said that the outlook of the LCC industry was not rosy when it was introduced, but the industry has survived significant upheaval throughout the past decade. Starting with the launch of Jeju Air in 2004, Korea’s first LCC, the industry has been in an expansionary mode with six LCCs in operation. LCCs now lead the airline market, and conventional major airliners are struggling, with Asiana Airlines being in a similar situation, he said.
If airliners are complacent with the conventional mold, he said they will fail. They must continue to adapt to survive.
Asiana Airlines cut its manpower and costs last year, Kim said.
He said his company plans to focus on ramping up competitiveness this year by introducing four A350s. The airliner is to introduce a combined 30 A350s between 2017 and 2025. With the introduction of highly efficient hardware, he said customer satisfaction will rise. Asiana Airlines, established in 1988, marks its 29th anniversary on Feb. 17. “This is the most significant year, and if Asiana Airliners overcomes the process (restructuring), it will grow further next year marking the 30th anniversary.”
President Kim said management conditions for this year are not easy, particularly due to rising crude oil prices and severe foreign exchange fluctuations, so the airliner has no options but to secure a competitive edge not to be swayed by business environment changes.