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(LEAD) S. Korea mulls further support for virus-hit airlines

All News 16:50 April 29, 2020

(ATTN: ADDS stock prices in last para)

SEOUL, April 29 (Yonhap) -- South Korea is considering further financial support for airlines hit by the coronavirus outbreak on the condition that they push for self-help measures and keep their workforces, the transport ministry said Wednesday.

Last month, the government announced it would inject 300 billion won (US$250 million) into the country's seven low-cost carriers (LCCs). Two full-service carriers also demanded emergency financial aid from the government.

In a meeting with chief executives from the nine carriers, Vice Transport Minister Son Myoung-soo said the government will execute all of the promised loans as quickly as possible, and if necessary, it will consider extending additional loans through local lenders to the airlines.

"The government hopes that the financial package, including tax benefits, subsidies for employment and reduction in airport usage fees, will help airlines stay afloat during the coronavirus crisis and help them maintain workers," Son said.

This file photo shows Korean Air aircraft at Incheon International Airport, west of Seoul. (Yonhap)

The transport ministry said airlines are expected to suffer a combined sales loss of over 6 trillion won in the first half, as 98 percent of their flights on international routes have been suspended amid virus fears.

In extended efforts to help airlines, the Korea Development Bank and the Export-Import Bank of Korea -- two policy lenders -- said they will extend fresh capital worth 1.2 trillion won to Korean Air Lines Co.

The two state lenders plan to inject 1.7 trillion won into Asiana Airlines Inc. to help it stay afloat and dispel growing concerns that the creditor banks' plan to sell Asiana may fall through due to the virus impact.

On Wednesday, HDC Hyundai Development Co. said its acquisition of Asiana will be completed after May as one of five foreign regulators has yet to approve their integration.

Korean Air and Asiana agreed to take measures to improve their financial status through sales of assets and to offer job guarantees to employees in exchange for the government's support packages.

Local airlines have suspended most of their flights on international routes since March as an increasing number of countries have enacted entry restrictions amid virus fears.

South Korea has two full-service carriers -- Korean Air and Asiana -- and seven LCCs -- Jeju Air, Jin Air Co., Air Busan Co., Air Seoul Inc., Eastar Jet, T'way and Fly Gangwon.

On Wednesday, airline stocks ended mixed. Korean Air rose 0.5 percent to 19,800 won but Asiana fell 1 percent to 4,170 won. Leading budget carrier Jeju Air gained 1.2 percent to 20,450 won.


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