By Choi Kyong-ae
SEOUL, May 11 (Yonhap) -- Korean Air Lines Co. will decide this week on whether to sell 1 trillion won (US$820 million) worth of stocks as part of self-help measures amid the growing coronavirus impact on the airline sector, industry sources said Monday.
Korean Air plans to hold a board meeting Wednesday to determine the exact size and the schedule of the rights issue, an airline official told Yonhap News Agency over the phone.
Shareholders of the country's biggest carrier will be given the rights to buy the stocks to be issued.
Korean Air's parent Hanjin KAL Corp. is expected to inject about 300 billion won into the national flag carrier given that it owns a 29.96 percent stake in the carrier.
The capital increase under consideration is one of the options that Korean Air reviews to ride out the coronavirus crisis, the company said.
Korean Air currently offers 55 flights a week on 13 international routes, sharply down from more than 900 flights on 110 long-haul routes before the airline industry was hit by the coronavirus. Starting in June, 146 flights on 32 international routes will be available.
It has suspended more than 90 percent of flights on international routes since late March, as an increasing number of countries have closed their borders or have taken other measures related to incoming passengers.
As part of self-rescue efforts, Korean Air had 70 percent of its 20,000-strong workforce take paid leave for six months starting Thursday and is in the process of selling non-core assets to secure cash.
On Thursday, Korean Air asked Credit Suisse (CS) to provide consulting services on the reorganization of its business units in return for a planned capital injection of 1.2 trillion won from two state lenders -- the Korea Development Bank and the Export-Import Bank of Korea.
But the company denied that it has selected CS as the lead manager for the sale of certain business units to raise capital.
Korean Air has reportedly been considering selling core business units involving in-flight meals and maintenance, repair and operation (MRO), and property assets, as the creditor banks want the airline to submit its self-rescue measures within this month.
Korean Air is set to report poor first-quarter earnings results this week, and an earnings shock is likely for this year if the coronavirus outbreak prolongs throughout the year.
Its net losses widened to 624.87 billion won last year from 185.65 billion won a year earlier due to a weak won and lower demand.
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