Korean Air (KE, Seoul Incheon) and the Korean Air Labour Union have agreed to freeze wages and keep 70% of employees on furlough during the first half of 2021 as the airline continues to cut costs to cope with the impact of Covid-19, the Yonhap News Agency reported.

The same percentage of the company’s approximately 18,000 employees, about 12,600 employees, have already been taking unpaid leave since April. The management and the union have agreed to maintain these conditions until at least June 30, 2021, as the alternative would be mass redundancies.

“We are faced with an unprecedented emergency situation due to the fallout of Covid-19,” the union explained in a statement. “The labour union and the management are sharing the burden by selling assets, cutting costs, and keeping furlough programmes to maintain employment.”

However, the union insisted that 50% of this year’s bonus for “family month” - the month of May in South Korea - be paid by the end of 2020, which Korean Air promised to do.

Simultaneously, the management assured the union that “there is no review on the separation of MRO” from the company, in response to a flurry of recent local media reports claiming that Korean Air had been considering the sale of its maintenance business.

Korean Air has, however, now completed the sale of its inflight catering and duty-free business to Seoul-based private equity firm Hahn & Company for KRW990.6 billion won (USD895 million), the Maeil business newspaper reported.

As was outlined in August when the deal was announced, on the same day that the acquisition closed, December 17, the flag carrier acquired a 20% stake in Korean Air C&D Service Co., a new company that Hahn established to house the inflight business, for KRW96.3 billion (USD87 million). This means that Hahn & Company owns 80% of the newly created holding company, Korean Air 20%. Hahn will manage Korean Air C&D Service as the largest shareholder while the airline will sign a contract with the new company to access its meals and duty-free products.

Korean Air is also moving forward in selling wholly-owned Wangsan Leisure Development, which operates the Wangsan Marina close to Seoul Incheon airport. For this, the investment bank Mirae Asset Daewoo has been selected as preferred negotiator.

An airport bus business operated by Korean Air subsidiary Aviation Comprehensive Service is being sold to Keithton Partners, another private equity firm.

However, the process to sell a plot of land in Songhyeon-dong, central Seoul, by June 2021 for KRW450-550 billion (USD400-500 million) has stalled due to a unilateral move by the City of Seoul to designate it as a cultural park.

In related news, South Korean transport minister candidate Chang-heum Byun, who President Moon Jae-in put forward two weeks ago in a cabinet reshuffle, described Korean Air’s planned acquisition of Asiana Airlines (OZ, Seoul Incheon) on December 21 as an inevitable option for overcoming the crisis in the aviation industry, Yonhap reported.

Asked for his views on the merger during a personnel hearing at the National Assembly, he said: “The coronavirus pandemic persists, making it difficult for the companies to survive.” On a possible rise in fares, he said: “If you pursue monopoly profit through an excessive fare increase, you can use transportation rights and slots to penalise airlines.” On concerns for the workforce, he commented: “I know that Korean Air and [parent] Hanjin KAL are promoting integration between full-service and low-cost carriers under a principle of employment maintenance. I will see to it that the integrated airline can create an integrated synergy effect under this principle.”