South Korea’s low-cost carrier T’way Air is moving to place cabin crew on unpaid leave as surging fuel costs tied to the U.S.-Iran conflict add pressure to an already strained balance sheet.
The airline recently notified flight attendants that it would accept applications for unpaid leave covering May and June, according to industry officials. It marks the first such measure since August 2024, when the company faced excess staffing due to delayed aircraft deliveries.
The decision comes as airlines contend with rising jet fuel prices and softening passenger demand. Industry observers say the leave period could be extended depending on fuel costs and booking trends, though the company appears to be limiting the initial program to two months ahead of the peak summer travel season starting in July.
T’way Air has been viewed as one of the more financially vulnerable carriers among South Korea’s low-cost airlines. Since 2024, it has expanded aggressively into long-haul routes, including Europe, increasing its exposure to fuel costs and currency fluctuations.
Those pressures have intensified this year as the U.S.-Iran conflict pushed oil prices higher and weakened the Korean won against the dollar, creating a dual strain of rising costs and declining demand.
Airlines have raised fuel surcharges to offset higher costs, but the impact varies. Low-cost carriers typically operate short-haul routes across Northeast and Southeast Asia, where demand is relatively less sensitive to surcharge increases. T’way Air, however, has a larger share of long-haul routes, leaving it more exposed to sustained increases in fuel prices.
The company’s financial position has deteriorated sharply. Its debt-to-equity ratio reached about 3,483% at the end of 2024, far exceeding peers such as Jeju Air, Jin Air and Air Busan.
T’way Air has reported operating losses since the second quarter of 2024 and briefly entered negative equity last year. Although it has raised capital through multiple share offerings, continued losses have heightened concerns about its financial stability.
Industry officials say that if geopolitical tensions persist into the summer peak season, the airline’s financial strain could deepen further.
