March 10, 2020 / 7:08 AM / 22 days ago

UPDATE 1-Korean Air president says coronavirus a threat to its survival

(Adds Korean Air measures, government support to budget carriers, detail)

By Hyunjoo Jin

SEOUL, March 9 (Reuters) - Korean Air Lines has warned that the coronavirus outbreak could threaten its survival after more than half of the world restricted passengers entering from South Korea.

Woo Kee-hong, Korean Air's president, said more than 80% of South Korea's biggest carrier's international capacity had been cut as a result of travel restrictions globally, compared with a 18% cut made during the 1997-1998 Asian financial crisis.

"We can easily imagine the severity of the crisis we are facing in comparison. And what is more daunting is that the situation can get worse at any time and we cannot even predict how long it will last," Woo said in a memo to employees dated on Monday.

Woo said Korean Air had grounded about 100 of its 145 passenger aircraft.

Self-help measures included deferring investments, cutting down on operational expenses and encouraging employees to take voluntary leave, he said.

"But if the situation continues for a longer period, we may reach the threshold where we cannot guarantee the company’s survival," he said in the memo, seen by Reuters.

But he said the company was "strong and resilient", adding: "We will keep this basic principle of minimizing the sacrifice of our employees."

Korean Air said on Tuesday it is encouraging foreign pilots to take leave from next month.

Japan joined a number of countries to impose curbs on travelers from South Korea on Thursday, adding to the woes of its airlines, which have been among the hardest-hit by flight cancellations.

South Korea's Asiana Airlines and budget carriers Jin Air, Air Busan and T'way Air suspended all routes between Japan and South Korea on Monday.

The transport ministry, financial regulator and state-run Korea Development Bank announced last month that they would extend up to 300 billion won ($251.55 million) of liquidity to domestic budget carriers because of the crisis.

The Korea Centers for Disease Control and Prevention on Tuesday reported 35 new coronavirus cases, bringing the national tally to 7,513 in one of the most severely affected countries outside mainland China. ($1 = 1,192.6200 won) (Reporting by Hyunjoo Jin; additional reporting by Joyce Lee Editing by Alexander Smith, Robert Birsel)

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