(Yonhap via The Korea Herald/Asia News Network)
SEOUL — As continued losses in the second quarter are expected for the aviation industry over COVID-19 pandemic, the South Korean government is expected to roll out an upgraded support measure for cash-strapped air carriers this week, according to the government sources on Sunday.
According to the government, the fifth round of emergency economic council meetings presided over by President Moon Jae-in is set to take place this week.
President Moon has been reiterating the need to support ailing companies amid the economic downturn stemming from the impact of the COVID-19 pandemic.
“The government will preferentially support the companies which retain job security through management-labor agreement,” President Moon said in a speech during a ceremony to mark the 60th anniversary of the 1960 pro-democracy revolution on Sunday.
Local media outlets reported the same day that a fresh set of measures expected to roll out this week are likely to include the government guaranteeing 20 trillion won ($16.4 billion) in corporate bonds. The bonds are expected to help support air carriers like Korean Air and Asiana Airlines, which have to pay back loans worth a combined 2.5 trillion won by year-end, media reported.
But the Ministry of Economy and Finance released a statement that nothing has been confirmed on the agenda of the meeting and the details of the measure.
If executed, it would be the third set of support measures for the aviation industry in two months. In February, the government announced it would extend loans worth a total of 300 billion won to airlines facing a liquidity crunch through the state-run Korea Development Bank. The government has also allowed air carriers to defer airport usage fees.
Last month, the government also rolled out a plan to inject some 50 billion won to help the transport sector by exempting fees and delaying payments to cover the businesses’ losses caused by a sharp drop in passengers.
But earlier this month, the Korea Civil Aviation Association submitted a petition to the government to exempt all taxes and to increase subsidies for “practical support.” This led to the Jung-gu district office in Incheon and Gangseo-gu district office in Seoul to review a legislation revision on decreasing property taxes for aircraft.
Korean Air, which has suspended 90 percent of its flight routes, has shut down the majority of its international routes, which contribute to 94 percent of its sales. Despite the limited income, the air carrier has been spending at least 400 billion won monthly for stationing aircraft at parking ramps, as well as paying rental fees for leased planes.
Asiana Airlines has also extended all employees’ unpaid leave for at least 15 days, until business volume is “normalized,” according to the company on Sunday.