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(EDITORIAL from Korea Times on Nov. 14)

Editorials from Korean Dailies 07:14 November 14, 2019

Sale of Asiana Airlines
Win-win strategy needed to hone competitiveness

Asiana Airlines is likely to find a new owner after a consortium led by construction firm HDC Hyundai Development Co. was chosen as the preferred bidder for the country's No. 2 carrier Tuesday. If it succeeds in taking over the troubled airline, HDC can diversify its business portfolio and boost the local airline industry.

In this regard, we welcome the selection of HDC as the preferred bidder. The HDC-Mirae Asset Daewoo consortium beat out two other competitors by offering the highest bid estimated at 2.5 trillion won ($2.1 billion). The strength of the consortium lies in the synergy HDC can create by combining the airline with its current businesses of construction, hotels and resorts, and duty free shops.

That's why the market showed a positive reaction to the potential sale of Asiana whose share price climbed 13 percent to 6,580 won. Its budget carrier, Air Busan, surged by the daily maximum of 30 percent to 9,320 won. However, HDC's share price remained weak.

To be more exact, HDC's selection has drawn mixed feelings of hope and fears. The positive side is expectations about the normalization of the debt-ridden Asiana, and portfolio diversification on the part of HDC. On the other hand, there are concerns about risks arising from the heavy financial burden required to put the reeling airline into the black.

So the success of the deal will depend on HDC's plan to put Asiana back on track. It is expected to be a hard process, not least the purchase negotiations between HDC and Asiana's parent company, Kumho Asiana Group.

It was reported that HDC and Mirae Asset Daewoo formed an 80:20 consortium to acquire a 31 percent stake in Asiana. After the takeover, the consortium plans to issue new shares to purchase the airline's six affiliates, including budget carriers such as Air Busan and Air Seoul.

It is highly likely that HDC will emerge as the successful bidder as things now stand. Of course, there will be a tug-of-war between the seller and the buyer over the terms of the deal. But, we hope both sides will conduct smooth negotiations for a successful outcome.

First of all, HDC's potential buyout should focus on setting out a win-win strategy to beef up the country's airline industry. Without increasing its competitiveness, the industry cannot compete with foreign airlines. Asiana, which has about 70 international routes, is required to improve its passenger services and ensure flight safety.

More important is that Asiana should be subject to drastic restructuring to save costs and ensure effective operations. The company also needs to improve its transparency and accountability. HDC, if it becomes the new owner, must make a massive investment to transform the shaky airline into a new flagship carrier so that it can regain consumer confidence.

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