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South Korea tackles U.S. air-safety downgrade

incheon airport
The stocks of South Korea's two biggest airlines fell Friday as the government rushed to address air safety  


By CNN's Alex Frew McMillan and wire reports

SEOUL, South Korea -- The South Korean government rushed Friday to deal with a U.S. downgrade of its air safety rating.

U.S. airline regulators are expected to drop their official safety rating on the country later today.

The move would block South Korea's airlines from expanding in the United States. It is also a damaging blow as South Korea prepares to co-host the 2002 World Cup.

The move from the U.S. Federal Aviation Administration is being driven by shortcomings with South Korea's oversight of Korean Air Lines and Asiana Airlines.

The downgrade would also block KAL and Asiana from engaging in code sharing with U.S. airlines.

It does not prevent U.S. airlines from flying to South Korea.

Lax oversight behind the move

The FAA wants South Korea to improve past problems with technical expertise, oversight of pilot training and monitoring in-flight incidents.

Local media report that an official from the American embassy in Seoul informed the South Korean transportation ministry of the downgrade, to an aviation security hazard, on Thursday.

A U.S. embassy spokesman declined comment on diplomatic discussions with another nation.

But confirmation of the downgrade from the FAA is expected during the U.S. day on Friday.

U.S. relations with South Korea have worsened under George W. Bush. The FAA's move had been brewing for some time.

But it still came suddenly to South Korean officials. They met on Friday to discuss how to boost the country's rating back to its previous level.

South Korea's deputy prime minister said there were eight areas where South Korean air safety fell short. He said the country satisfied six of them and is working fast to make improvements.

Improvements

KAL said it would cut 3 percent of its work force this week, by freezing hiring and asking employees to take early retirement.

KAL, South Korea's No. 1 airline, and Asiana, its No. 2 carrier, announced disappointing earnings this week.

KAL had an operating loss of $117 million (149.4 billion won) for the first half of 2001. That was worse than the 36 billion won it lost the same time last year.

It blamed the weaker won, bad weather and a pilot strike.

Asiana posted a loss of $122 million (156.3 billion won) for the first half, after netting a profit the same time last year.

It blamed a decline in tourist travel, as well as the won.

KAL stock ended Friday down 4.6 percent at 7,020 won. Asiana fell 0.5 percent to 2,010 won.

Reuters contributed to this report.







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