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Korean Air to raise 1 tln won via stock sale amid virus woes

All News 17:28 May 13, 2020

By Choi Kyong-ae

SEOUL, May 13 (Yonhap) -- Korean Air Lines Co. said Wednesday it will raise 1 trillion won (US$820 million) by selling stocks as part of self-help measures amid the growing coronavirus impact on the airline sector.

The capital increase is one of the options that Korean Air has reviewed to ride out the coronavirus crisis. Shareholders of the country's biggest carrier will be given the rights to buy the stocks to be issued, the company said.

Korean Air's parent Hanjin KAL Corp. is expected to inject 300 billion won into the national flag carrier given that it owns a 29.96 percent stake in the carrier.

Korean Air employees come to work at the national flag carrier's office building in Seosomun, central Seoul, on May 13, 2020, amid growing concerns over the coronavirus. (Yonhap)

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.

The company 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.

It plans to resume flights on 19 international routes on June 1 as the country's top flag carrier strives to offset a sharp decline in passenger travel demand with an increased demand for cargo deliveries.

The reopening routes include Washington, D.C., Seattle, Vancouver, Toronto, Frankfurt, Singapore, Beijing and Kuala Lumpur.

The move is aimed at preparing for increased travel demand after countries ease their entry restrictions on incoming passengers to stem the spread of the COVID-19 virus.

As part of self-rescue efforts, Korean Air had 70 percent of its 20,000-strong workforce take paid leave for six months starting April 16, and it is in the process of selling non-core assets to secure cash.

Last week, 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.

This undated file photo shows planes of Korean Air and Asiana Airlines at Incheon International Airport, west of Seoul. (Yonhap)

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 expected to report poor first-quarter earnings results later 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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