Korean Air has warned that the COVID-19 outbreak could threaten its survival in a memo issued to all staff on Monday.
Woo Kee-hong, the company’s president, said the airline was facing severe crisis, compounded by the fact it could not predict how long the situation will last.
“If the situation continues for a longer period, we may reach the threshold where we cannot guarantee the company’s survival,” he said.
The national flagship has slashed more than 80 per cent of its international capacity, encouraged employees to take voluntary leave, and grounded its Airbus A380 fleet.
Korean Air also stated that it paid out more in refunds than it received in bookings across February.
South Korea has been hit particularly hard by the virus, as well as travel restrictions aimed at curbing its spread.
The US Department of State lists travel to the country as a level three (of a possible four) risk; while the UK Foreign and Commonwealth Office warns against all travel to Daegu, Gyeongsan and Cheongo.
In the statement, Woo also noted that the airline would look to cut costs over the coming months by deferring investments, urging employees to take voluntary leave, and reducing operational expenses.
The news comes as roughly 100 of the company’s 145 aircraft are already grounded.
A spokesman for Korean Air told the BBC the purpose of the internal memo was “to encourage employees and ask for understanding to overcome the crisis together”.
“We have gone through numerous difficulties for the past 51 years, and I’m confident that we will overcome this crisis together,” he added.
Recent weeks have been devastating for the airline, which suffered a 37.6 per cent drop in passenger numbers along its international routes.
Several cabin crew have also tested positive for the virus, prompting the company to shutter its office at Seoul Incheon International.
Though fears over the virus have had a significant impact on the aviation industry, the US Centers for Disease Control and Prevention (CDC) still rates the risk of infection through air travel as low.
“Because of how air circulates and is filtered on airplanes, most viruses and other germs do not spread easily on airplanes,” the CDC maintains on updated advice regarding COVID-19.
“Although risk of infection on an airplane is low, travellers should try to avoid contact with sick passengers and wash their hands often with soap and water for at least 20 seconds or use hand sanitizer that contains 60 per cent – 95 per cent alcohol.”
Korean commercial aviation is highly reliant on sixth-freedom transfer traffic, with Seoul Incheon operating as an important hub connecting Asia and North America.
Last year, the airport ranked as the fifth-busiest in terms of international traffic, a point reflected in Korean Air’s business model.
Unlike larger Chinese airlines, Korean Air does not enjoy the benefits of state ownership, and has long been beset by financial difficulty.
However, the country’s Ministry of Land, Infrastructure and Transport issued an announcement on 17 February, stating that it would support the aviation industry with loans to the tune of US$251 million.
