Korean Air Chief Signals Drastic Downsizing
21 November, 2019
The troubled new chairman of Hanjin Group, which owns flag carrier Korean Air, has warned that any subsidiary that does not make a profit could be jettisoned.
Cho Won-tae made the remarks in New York on Tuesday where he accepted the Van Fleet Award from the Korea Society on behalf of his father, ousted ex-Korean Air chairman Cho Yang-ho, who died in April.
"Korean Air is the core business and I am not interested in any other business that does not support it," Cho said. He added that the current challenges facing the conglomerate "make it difficult to protect even that."
"I think we need to make some organizational changes once things settle down at Korean Air," Cho junior added.
A Hanjin source said the chairman wants to focus on core businesses like Korean Air and its travel and hotel subsidiaries, while reviewing the need to continue non-core subsidiaries such as port and maritime transport operations.
Ownership stakes of Hanjin KAL, the group's holding company was distributed more or less evenly among the dysfunctional heirs. "This ownership structure makes it necessary for our family to cooperate," Cho Won-tae said. "I have no intention of monopolizing power and wish to get along well with my siblings."
This may not prove easy since they are notorious for their anger management problems and erratic behavior.
Cho also complained that there are too many airlines in Korea for the country's size. "There are nine airlines in Korea and the U.S. also has nine," he said. "This may seem good news for consumers but can't last."
Turning to the scandals that have plagued his family, from assault to running a luxury-goods smuggling racket, he put on a suitably contrite face. "We have not shown our best side until now, and I don't think we'll be able to regain the trust of consumers in the short term," he admitted. "But we will try hard to grow into a company that is trusted."
The posthumous award for his father, named after General James Van Fleet, commander of the U.S. Eighth Army at the height of the Korean War, is given to "one or more distinguished Koreans or Americans in recognition of their outstanding contributions to the promotion of U.S.-Korea relations."
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