Under the two-year plan, Asiana is set to close three international routes this year and reduce the number of branch offices and new recruitments. The company also plans to carry out a voluntary retirement program to cut down the labor cost.

In a letter issued last week, Asiana Airlines CEO Kim Soo-cheon urged employees to participate in the company’s restructuring programs, vowing that he wouldn’t force anyone out.

The union, however, remains skeptical about his proposal.

They believe that the company will cut more than 200 staff in sales and reservations departments, and about 250 service jobs at domestic airports, raising speculations that the regular positions will be replaced by outsourced staff.

Asiana will also slash welfare benefits and impose a heavier work burden on the existing staff, they said.

Rather than unfavorable external factors, the union said the management is responsible for the company’s financial mess. A hurried acquisition of Daewoo Engineering and Construction in 2006 and Korea Express in 2008 by the carrier’s parent company Kumho Asiana is the fundamental reason for the troubles, they said.

In 2009, Kumho Asiana Group suffered a severe liquidity crisis as it took huge loans to acquire the two firms.

The carrier’s debt-to-equity ratio exceeds 1,000 percent currently, making it difficult to cover interest payments with the sales profits it has generated over the last four years.

The firm’s financial ability to meet interest payments has dropped to that of zombie firms, or long-time loss-making enterprises, according to analysts.

Asiana expects to produce about 160 billion won ($135 million) in additional profit through the restructuring plan.

Shares of Asiana Airlines closed at 4,375 won on the Seoul bourse Tuesday, a drop of 2.56 percent from a day earlier.

By Cho Chung-un (christory@heraldcorp.com)