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Korean Air Pilots Vote to Go on Strike BUSINESS ASIA By Bloomberg

Posted on: Thursday, 8 December 2005, 12:00 CST

By Yunsuk Lim and Meeyoung Song

Pilots at Korean Air Lines voted to go on strike at midnight Wednesday to demand higher wages, paving the way for the second stoppage by a South Korean airline this year.

The airline's unionized pilots voted four to one to stop working in a ballot on Tuesday night after management rejected their demands for a 6.5 percent pay rise, according to a notice on the union's web site. The union had said it would hold talks with management at the carrier, South Korea's largest, on Wednesday. The strike could dent earnings at Korean Air and hold up exports of South Korean goods. A 25-day stoppage at Asiana Airlines cost South Korea's No. 2 carrier 165 billion won, or $159 million, in lost sales and stopped $150 million of South Korean products from being shipped overseas in July.

Korean Air had its first profit gain in three quarters in the three months to Sept. 30. The carrier cut wage costs by 6.5 percent in the quarter, slashed rental costs for planes by 24 percent and used surcharges and financial derivatives to shield earnings from record fuel prices.

Korean Air and other airlines are also facing higher fuel costs. Jet fuel traded in Singapore at an average of $75 a barrel in July to September, 45 percent more than the average of $51.73 last year, according to the oil-pricing service Platts. The price of jet fuel surged as much as 77 percent this year to a record $85.355 a barrel on Oct. 3

Korean Air Lines Flight Crew Union said on its Web site that 1,126 of its 1,344 union members had voted, with 897 backing strike action. Union workers at Korean Air said April 20 that they would let the management decide on wages this year and give up their rights to negotiate a wage increase as soaring fuel prices and competition erode the airline's earnings.

Korean Air employees, including pilots, received an average 5.4 percent wage increase last year, compared with the national average of 6 percent. South Korea's core inflation rate was 2.9 percent last year.

Pilots of Asiana Airlines halted their strike on Aug. 10 after the government ordered them to return to work because the strike was hurting exports. About $150 million of South Korean products could not be exported in July because of the strike at Asiana, according to the Commerce Ministry in August.

The strike forced Asiana to ground 32 percent of flights.

Source: International Herald Tribune

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