Volcanic ash cloud hits Korean firms

 

 

Korean airlines, exporters and travel agencies were hit by a major airspace disruption caused by the volcanic ash cloud spreading from the southern part of Iceland.

 

Semiconductor, mobile phone and other electronics makers which mostly deliver products by airplane, are likely to suffer as the flight disruptions are projected to last longer, up to an additional one-two weeks.

 

Many manufacturers are also concerned that they may discontinue operating due to failed delivery of necessary components from abroad.

 

Large firms such as Samsung Electronics, LG Electronics and Hyundai-Kia Motors, which all have factories in Europe, were reportedly reviewing contingency plans as they were experiencing difficulty in shipping their products to and from Europe.

 

The sales loss for Hynix Semiconductor was also estimated at 2 billion won ($1.79 million) per day because of the temporary export stop.

 

Industry insiders say sales lossed will top 5 billion won for the semiconductor industry when Hynix’s loss is added onto Samsung’s.

 

For the mobile phone industry, the two giants Samsung and LG Electronics are losing up to $30 million per day. On average, they ship 200,000 units of phones daily.

 

The Korea Trade-Investment Promotion Agency also said yesterday that 70 representatives from 38 companies are unlikely to open their booths at the Hannover Fair in Germany from today until Friday due to flight cancellations.

 

The two-day visit to Korea scheduled by Netherlands buyers looking for shipbuilding equipment and other related materials starting today is also expected to be called off, said KOTRA.

 

Authorities at Incheon International Airport said a total of 122 flights -- including 74 of Korean Air and 23 from Asiana Airlines -- were canceled from Friday until yesterday.

 

The estimated loss coming from the flight cancellations, however, was still being reviewed because the disruption is lasting longer than expected, said an official at the IIAC.

 

“We have begun making the assessment (yesterday) and it is projected to be released by (today),” the official said.

 

Both Korean Air and Asiana Airlines said they could not release the loss figures because ticket prices differ and the follow-up measures for the flight cancellations are still unknown.

 

The massive damage comes from the eruption of Iceland’s Eyjafjoell volcano which started on Wednesday. Ash caused by the eruption drifted towards Europe, stranding millions of travelers heading to and from Europe.

 

According to the Airports Council International, a total of 313 airports have been paralyzed by the global backlog, impacting 6.8 million passengers and forcing European airports to lose almost 136 million euros ($183 million).

 

EU Commission chief Jose Manuel Barroso ordered a full assessment study on the impact of the volcanic ash cloud on the economy, especially the air travel industry.

 

 

Source: The Korea Herald