Tariffs ensure turbulence at Korean Air, CEO remains optimistic

Tariffs ensure turbulence at Korean Air, CEO remains optimistic

SEOUL, South Korea-the managing director of Korean Air, one of the leading airlines in the world, urgently warns of the effects of the trade war under US President Donald Trump on some of the most popular routes in the airline.
"We are already seeing declines in passenger volume on transacific connections and also in Europe," said Walter Cho in an interview with CNN this week, just a few steps away from a shiny Boeing 777 aircraft, which has been deleted in the characteristic blue and white tones of the airline. "It is subtle, maybe 5 % compared to the previous year, but has a significant impact on our business."

effects on the finances of Korean Air

When asked how this decline is financially effective, Cho indicated that Korean Air could lose between $ 50 and $ 100 million in revenue in the course of 2025. "The economy of Koreas is located between the USA and China, and we are also very dependent on both markets," he said.

"We are preparing for the effects we expect. I don't expect a great year for the Korean economy, and we are currently analyzing our costs. But I hope I am wrong," he added.

Korean Air and the competition in the airline sector

Korean Air, which completed the takeover of rival Asiana Airlines in December, is not the only great airline that warns of the challenges by tariffs. Delta Air Lines reported in April that the revenue could decrease in the current quarter and that "growth has largely been standing standing up". Delta, American Airlines and Southwest Airlines have hired the provision of their financial forecasts for the whole year due to the uncertainties.

Nevertheless, Cho remains optimistic. He believes that the trade war will soon end and Korean Air will continue to be profitable. He partially attributed the decline in traffic to the increased competition on the European and Pacific routes, as the trips to the level return to covid.

Expansion of the flight offer to the USA

During US airlines like United and Southwest

"I viewed the booking data for the summer; they are very strong," he said. "From June, mid -June, everything is fully booked, until the first week of September."

Probably knowing that the challenges by the trade war cannot be ignored for the industry, the consulting company Tourism Economics that in the event of an escalated trade war in the USA will go back this year by 12.7 % could result in an annual loss of $ 22 billion in the area of travel.

Outside of the United States, the International Air Transport Association (IATA) reports that the global traveling situation appears robust. In a Interview with interview with Reuters In April, IATA General Director Willie Walsh explained that the historically stressed relationship of the aviation industry can usually be managed well.

The transatlantic trips rose in January and February compared to the previous year, while global demand is still about 9 % above the level before pandemic, according to Walsh. "It is not obvious that there was an impact," he added, since the data is still standing for March and April.

A chaotic customs environment could also be a challenge for freight traffic, which is a significant part of Korean Air's business. During the Covid 19 pandemic, the airline converted passenger aircraft into freight planes.

focus on new markets

The conversion of the business model to freight and trade during the deepest phase of the economic shock in 2020 helped the airline to save itself, Cho said. In view of a very different customs -related shock in 2025, Korean Air could have to search for new markets. "It will be difficult, because about 40 % of our business, the business generated by Korean Air, is eliminated on freight, and that is strongly influenced if the tariffs affect Korea and China," said Cho.

"I am not planning to reduce our freight. We will concentrate our volume in Europe and other places where the demand will still exist. I have observed a lot of trade between China and Canada, for example. We could also concentrate on these markets," he added.

Korean Air and American manufacturer

A potential risk factor for Korean Air is that South Korea produces a high number of semiconductor chips for the United States, explained Shukor Yusof, founder of the Endau Analytics based in Singapore, a consulting firm that focuses on the aviation industries. Although the Trump administration has initially excluded semiconductors, smartphones, computer screens and various electronic components from tariffs, the uncertainty remains.

"You feel the pressure," said Yusof.

large orders from Boeing

in March Korean Air finalized his largest Boeing order order all time : Up to 50 large-scale aircraft, including 20 Boeing 777-9 and 20 Boeing 787-10 Dreamliners with options for 10 other Dreamliners. The aircraft are driven by GE Aerospace engines, a combined deal worth $ 32 billion, the was praised by the white house.

"Yes, but I've always been a Boeing fan, so to speak," said Cho. "There are only two options (the other is Airbus), I have always trusted Boeing and always contact Boeing when I have needed."

The decision to buy Boeing aircraft fell before Trump's second term in the past year. He explains that his signature under the Mega Agreement in Washington is demonstrating strong relationships between Korean Air and the US industry.

improvement of the passenger experience

Despite potential difficulties in the global economy, Cho says that the planned upgrades of all Korean Air cabins are not suspended. After approval of the long -awaited merger with Asiana in December, he explained that the aim of the larger airline was to catch up with the greater airline in terms of quality and luxury to global competitors such as Singapore Airlines and Qatar Airways.

"We don't stop," emphasized Cho. "I think it's a long -term investment. As soon as I win the trust of customers, they will come back."

The place in the relatively spacious economy class by Korean Air is not reduced. The upgrades of the lounges of the lounges in New York JFK, Seoul Incheon and Los Angeles Lax are also not discontinued, although the fear of recession is increasing.

"I think it is important that all passengers also have some comfort in the economy class," said Cho. "That is why we keep our seat spacing, which is much larger than the industry average, and we introduce new meals, including new Korean cuisine as well as a new entertainment system and Wi-Fi."

In the next three to four years, Cho expects that new seats and renovated cabins will be installed in the entire fleet of Korean Air, which was expanded after the merger. "We work as quickly as possible, but we have about 150 aircraft that we have to renovate. This takes longer than expected due to problems in the supply chain."

Cho was open about the upcoming turbulence: a more than billion -dollar fusion, an aggressive fleet modernization and a global trade war that threatens to reduce Korean Air's income. "There is a lot of money," he admitted and thought of the most ambitious changes that the airline has made in recent decades. "But it was 43 years ago since we changed. It is time."

at a time when many airlines are moving back their activities, Cho makes a calculated and significant decision: that the constant relationships with the USA and persistent investments in the Korean Air passenger experience will help to survive the storm of a trade war, the end of which is uncertain.