Asiana`s `Air Seoul` expected to improve profitability

Asiana Airlines made an announcement to its executives and employees on Wednesday that it would normalize its management by changing routes, slimming their structure, and upgrading their flights.

Asiana will transfer 11 lines to "Air Seoul" including their Japan lines and South East Asia night lines. Air Seoul is low-cost airliner that Asiana has established for the purpose of reconstructing their low-income lines. Asiana will stop their service to Vladivostok in February, as well as to Yangon and Bali in March.

In order to slim the organization, Asiana will integrate 23 domestic branches into 14 and 128 overseas branches into 92, while hiring specialized agencies to take care of some tasks. Asiana will reduce the number of employees, while launching a new system for flexible leaves of absence and flexible retirement. The airliner will make an effort to decrease unnecessary expenses and maximize profits in all areas except for safety such as improvement of service process. The company reportedly will stop providing its executives with vehicles, cut down their salaries.

In the meanwhile, Asiana plans to create a new seat class called "Premium Economy," a middle class between business and economy, in the next generation flight A350 to be launched in 2017. Asiana estimates its new plan will lead to a profit-loss improvement of 160 billion won (13.6 million U.S. dollars) every year.

The nation`s second largest carrier had suffered from low profitability due to the rising popularity of low-cost airlines, which intensified the competition for short routes, along with a strong dollar. "Asiana will continue to grow by recovering its competitiveness and improving its structure," Asiana Airlines President Kim Soo-cheon says. "We will normalize and complete our management reform in two years."

sunggyu@donga.com