Government to Help Korean Air Purchase Struggling Asiana Airlines

It looks like someone has finally decided to purchase Asiana Airlines, but it took a huge government investment to make it happen:

Korean Air Lines, the country’s largest carrier, will acquire cash-strapped rival Asiana Airlines with the help of the state-run Korea Development Bank (KDB).

The new airline will become the world’s No. 7 carrier by capacity to transport passengers and cargo, according to 2019 IATA numbersprovided by KDB.  

On Monday, the bank announced that it will indirectly provide financing to Korean Air Lines, which will use those funds and additional proceeds from a stock sale to buy a significant stake in Asiana Airlines.  

In the complex transaction, KDB will invest 500 billion won ($451.6 million) in Hanjin KAL and buy 300 billion won of the company’s exchangeable bonds. Hanjin KAL, which already owns 29.27 percent of Korean Air Lines, will buy 730 billion won of a 2.5-trillion-won share offering by the airline.  

The carrier will then use 1.8 trillion won of the newly raised capital to become the biggest shareholder of Asiana Airlines, by purchasing 1.5 trillion won of the airline’s new shares and 300 billion worth of perpetual bonds.

Joong Ang Ilbo

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