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(EDITORIAL from Korea Times on Aug. 10)

All News 07:23 August 10, 2020

Fate of Asiana Airlines

All parties should strive to finalize takeover deal

The envisioned acquisition of ailing Asiana Airlines by Hyundai Development Company (HDC) faces a critical juncture this week. Kumho Industrial, the major shareholder of the airline, and main creditor Korea Development Bank (KDB) delivered an ultimatum to HDC to complete the deal by Aug. 11.

Officials from HDC and Kumho plan to meet soon to discuss the issue and are expected to engage in a tug-of-war, heralding a further hurdle in negotiations.

HDC said in a press release Sunday that it would demand an additional three months of due diligence into Asiana. Kumho has maintained it will cancel the deal and keep the 10 percent down payment of 250 billion won ($210 million) should the property developer fail to finalize the deal by the agreed upon time. KDB Chairman Lee Dong-gull also hinted at a possible annulling of the contract during a press conference last Monday.

Lee claimed HDC should take all responsibility in the event the deal falls through. HDC has asserted that both KDB and Kumho have been distorting its real intention of conducting another due diligence into the cash-strapped airline.

HDC threw its hat in the ring to take over Asiana in a bid to expand its business into transport after the sale of the airline was announced in July last year. The sudden outbreak of COVID-19 dealt a serious blow to global airlines, including Asiana. The coronavirus added fuel to its managerial hardship as it had already been staggering amid over-competition with sprouting low cost carriers (LCCs).

The KDB said it would look for another option including seeking a third party if the HDC deal collapses. The bank also cited the possibility of turning the airline into a state-run firm. We urge the relevant parties to make all possible efforts to normalize the staggering airline as soon as possible. We oppose any plan to put the firm under state control, which will undermine the competitiveness of the airline and cause massive layoffs.

Against this backdrop, it is fortunate that Asiana shifted to a net profit of 116 billion won in the second quarter year-on-year thanks to rising cargo volume, despite dwindling numbers of passengers. We hope the improving performance will help prompt the takeover deal.

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