SEOUL, 16 April 2019:
Asiana Airlines’ creditors are working on a financial support plan for the debt-laden South Korean carrier that would target a sale of the airline and its two budget affiliates over the next six months, its main creditor said.
Lee Dong-gull, chairman of Korea Development Bank (KDB), told a briefing today creditors plan to a come up with a financial plan for the carrier by April 25, with a goal to sign a preliminary deal in late April or early May.
Its top shareholder, Kumho Industrial, yesterday said it plans to sell its entire 33.5% stake, worth 500 billion won (US$440.08 million) at Monday’s closing price, to receive creditor support.
The creditors had earlier rejected Kumho’s request to provide support of 500 billion won to the airline, forcing the conglomerate to come up with a plan to immediately sell the crown jewel to get liquidity injection.
KDB’s Lee said creditors plan to provide “enough support” to stabilize Asiana management and regain market trust, without disclosing details.
Lee said it is “desirable” that Asiana should also sell its units, which include two budget carrier arms, Air Busan and Air Seoul.
Kumho Asiana Group, Asiana Airlines’ parent conglomerate, has been reeling from its aggressive acquisition spree about a decade ago, which could see the planned sale of the flagship unit created in 1988 ahead of the Seoul Olympics.
Meanwhile, Hong Kong Airlines (HKA) ex-director Zhong Guosong has been appointed its chairman as part of a board expansion aimed at turning around the struggling company, formerly controlled by heavily-indebted Chinese conglomerate HNA Group.
The move hands effective control of the airline to Zhong and Chinese private equity firm Frontier Investment Partner who hold stakes of about 27% and 345 respectively. HNA, which cut its stake two years ago, holds about 29%.
Earlier this month, HKA executives told shareholders the company needed to raise at least HK$2 billion (US$255.12 million) or risk losing its operating licence.
The city’s third largest airline has been cutting back on its long-haul operations, recently reducing the number of flights per week it offered to cities including Vancouver, San Francisco and Los Angeles, according to the airline’s scheduling information.
In mid-March, Hong Kong’s Air Transport Licensing Authority (ATLA) demanded the airline detail plans to improve its finances.
Separately, the management of India’s Jet Airways has proposed to suspend all operations of the debt-laden airline at its board meeting, ET Now reported today quoting sources.
Former chairman Naresh Goyal has withdrawn from making a bid for a stake in the company, the television channel reported.
The airline wrote in a letter yesterday to its employees that it planned to extend its suspension of international flights until Thursday as it had not received any interim funding from lenders.
Jet has been grounding planes in recent weeks as lessors move to de-register and take back their aircraft, even as the company’s lenders sought expressions of interest in the carrier from potential investors.
Local media have reported that as many as six parties have submitted expressions of interest, though it is still far from clear if an acceptable bid will materialise.
Worldwide, Iceland’s WOW air became the latest budget airline casualty in March, halting operations and cancelling all future flights after failing to raise more funds.
Other recent failures include Air Berlin, Britain’s Flybmi, German holiday airline Germania, Nordic budget airline Primera Air and Cypriot carrier Cobalt.