Asiana was struggling financially, and is being sold in a rescue to HDC Hyundai Development Company. That deal is expected to close in April. In the meantime, with coronovirus sapping travel demand, the Star Alliance member airline has cut 79% of China flying and 25% of intra-Southeast Asia departures.
While coronavirus is in some sense an exogenous event, beyond the control of management, the company’s weakness made them even more vulnerable. As a result the entire top management team at Asiana has asked to resign in recognition of their failure. While the company has determined that’s not in the best interests of the business at this time, top managers will all take a significant pay cut.
[Asiana’s CEO] said that all executives, including himself, have requested to resign to share the burden of the company’s difficult business situation…the voluntary resignations are not to be accepted right away, as the company needs them to operate.
“Their resignation illustrates how firm the company is devoted to execute all-out effort to save cost,” an official told The Korea Herald.
Han said that he himself would return 40 percent of his annual salary, while other executives will return 30 percent and division leaders will return 20 percent of their annual pay.
And with all executives putting themselves on the line, and taking reduced pay, the airline’s unions are willing to share in the pain too. Its pilots, for instance, agreed “to take 15 days of leave and return 50 percent of their bonus pay.”
As Japan Airlines struggled in 2006, its then-CEO cut his own perks and then in 2007 cut his salary down to $90,000. He said that unhappy customers shouldn’t blame the employees they’re dealing with, they should blame the person in charge.
Good executives own their failures, just as they’re rewarded for their successes. Good companies arrange their institutions and incentives so that this is the case – rather than packing their boards with cronies who reward failure as much as success. Boeing’s CEO, by the way, was reportedly surprised when he was fired last year.