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From downing of Flight 007 on, troubles plague Korean Air

August 8, 1997

SEOUL, South Korea (AP) _ The deadly crash of a Korean Air jet in Guam was the airline’s seventh major crash in the 1990s _ further battering the airline’s reputation and efforts to get back in the black.

``Passengers _ especially foreigners _ will shy away from KAL planes,″ Lee Sang-bae, an analyst at Dongsuh Securities Co., predicted Friday, using a common acronym for the airline.

The normally profitable company posted a loss of $236 million last year, and prospects for this year were not promising even before Wednesday’s crash.

Disasters have plagued the airline since 1983, when one of its 747s _ Flight 007 _ was shot down after straying into Soviet air space, killing all 269 people on board.

In 1987, a Korean Air Boeing 707 disappeared near Burma with 115 people aboard.

A Korean Air DC-10 crashed in Tripoli, Libya in 1989, killing 72 people. In two other accidents in 1983 and 1994, passengers managed to disembark before their planes burst into flames.

The crash of Flight 801 in Guam was the 12th total loss the airline has experienced in 30 years and its seventh crash this decade with damage to the aircraft, according to the trade publication Aviation Daily.

Independent ratings groups rank its safety record well below the safest airlines.

Even though the cause of Wednesday’s crash has not been determined, the airline’s reputation already has sustained significant damage _ particularly from suggestions that human error may have been to blame.

If pilot error is determined to be the cause, the company could face a series of lawsuits from family members of the more than 200 people killed.

That would be especially bad news for Korean Air at a time when competition is heating up at home with an industry newcomer, Asiana. Last year, Korean Air carried 46 percent of all passengers traveling in and out of South Korea.

Korean Air also is struggling with rising fuel costs and the decline of the value of Korean currency, the won, against the dollar, which raises the cost of servicing the company’s $4.5 billion in foreign debt.

Last year, Korean Air took in total revenues of $4.1 billion, up 8.4 percent from 1995. It plans to spend $10 billion by 2005 to double its fleet of jets, which now totals 121.

Most analysts agree that the company will be spared any major, immediate financial loss from the Guam crash. ``Korean Air enjoys an excellent cash flow,″ Lee Chul-hee, an analyst with Dongwon Securities Co., pointed out.

They say the impact will be long term, because of its tarnished image.

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