April 1, 2019 / 7:37 AM / 6 months ago

South Korea's Asiana Airlines to cut unprofitable routes, fleet size: CEO

A view of the Asiana Airline's head office in Seoul August 8, 2013. REUTERS/Kim Hong-Ji/Files

SEOUL (Reuters) - South Korea’s Asiana Airlines Inc plans to cut unprofitable routes and the size of its fleet to improve its financial health, Chief Executive Han Chang-soo said in a letter to employees on Monday.

Han’s co-chief executive resigned on Thursday and its debt-ridden parent Kumho Asiana Group sought financial support from its biggest creditor after an accounting fiasco triggered warnings of credit rating downgrades.

The letter, distributed publicly by the airline, did not detail routes to be cut or the resulting size of the fleet.

“Though it seems market concern about our airline is dissipating, we need to restore trust through bold innovation,” Han said in the letter.

South Korea’s second-largest carrier has been under pressure to strengthen its balance sheet after its auditor declined to sign off its latest financial report. The auditor’s decision led to a halt in the trading of Asiana shares and the resignation of Park Sam-koo as co-CEO as well as chairman of Kumho Asiana.

Asiana Airlines will establish a committee tasked with strengthening finances through asset sales, closing unprofitable routes and organisational restructuring, the letter showed.

The carrier currently operates 87 passenger routes with 83 aeroplanes.

Asiana shares closed on Monday unchanged from their previous trading day, whereas the broader market ended up 1.29 percent. The stock has lost 13.1 percent since March 21, a day before the two-day trading halt began, hovering near five-month low.

Reporting by Heekyong Yang and Ju-min Park; Editing by Christopher Cushing

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