Korean Air Activates Emergency Management Due to Rising Fuel Costs
Korean Air announced it is transitioning to an emergency management mode to mitigate the financial impact of escalating jet fuel prices amid the ongoing US-Israel conflict involving Iran.
A spokesperson for the national flag carrier stated on Tuesday that the airline will implement "internal cost-reduction measures" to manage its finances and ensure the company's "stability amidst rising fuel prices and global economic uncertainty."
Since the onset of the Iran war on 28 February, Brent crude oil prices have surged by over 50%, surpassing $110 (£83.33) per barrel, which has significantly increased jet fuel costs.
Employees of South Korea's largest airline were informed of these measures through a memo reviewed by the BBC.
Vice Chairman Woo Ki-hong addressed staff members, stating:
"We plan to switch to an emergency management system in April to prepare for rising costs due to a surge in fuel expenses."
He further explained that the airline will "pursue company-wide cost efficiency" through initiatives linked to oil price fluctuations.
Woo emphasized that these actions are:
"Not merely one-time cost-cutting initiative but rather an opportunity to strengthen our structural foundation."
Regional Impact and Industry Response
South Korea is particularly susceptible to disruptions in energy supplies from the Middle East, given its heavy reliance on oil and gas imports from the Gulf region.
In response to the crisis, the country's second-largest carrier, Asiana Airlines, along with budget airline Busan Air, have also entered emergency management mode.
All three airlines operate under the South Korean conglomerate Hanjin Group.
According to the latest figures from the International Air Transport Association, the average price of jet fuel reached nearly $200 (£151.45) per barrel on 20 March, more than doubling since February.
Current Market Trends
In Asian trade on Tuesday, energy prices experienced slight increases, with Brent crude rising by 0.3% to just over $113 per barrel.
The price of US-traded oil increased by 0.2% to $103 per barrel. Notably, on Monday, it closed above $100 per barrel for the first time since the conflict began.
Additional reporting by Leehyun Choi in Seoul.
