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【Youth Daily】 While Korean Air’s rumors of Korean Air’s acquisition of Asiana Airlines, which failed to take over from HDC Hyundai Development Company (HDC prefectural production), draw attention to the birth of a domestic airline large.
Consequently, it is noteworthy whether the reorganization of the aviation sector, which suffers from a new coronavirus infection (Corona 19), will be carried out.
However, due to Asiana Airlines’ high debt and union backlash, it will take some time to complete the acquisition process.
According to the airline industry on the 14th, Korean Air maintains a cautious stance that “nothing has been confirmed” regarding the acquisition of Asiana Airlines. Korean Air cares about it, but the industry and government already expect Hanjin Group’s acquisition of Asiana Airlines to begin sooner or later.
It is reported that the government will hold a meeting of related ministers (Sankyungjang) to strengthen industrial competitiveness as early as the 16th and will officially form the acquisition of Asiana Airlines by the Hanjin Group at the government level.
Korean Air is also said to be willing to take over, such as discussing the acquisition of Asiana Airlines with the Korea Development Bank for several months.
When Korean Air acquires Asiana Airlines, the ladder will quickly rise to the top 10 in the world. According to the “ World Air Transport Statistics 2020 ” published by the International Air Transport Association (IATA), Korean Air ranked 18th in the global airline rankings last year based on the RPK of international passengers (the number of passengers paid per flight multiplied by the flight distance) and Asiana Airlines. He took the 32nd place.
When Korean Air and Asiana Airlines combine, it is similar to American Airlines, which is ranked 10th. In terms of the number of international passengers, Korean Air is 19th and Asiana Airlines is 36. Together, it is 10th. In the international cargo volume ranking, Korean Air (5th) and Asiana Airlines (23rd) can be combined to take third place on Cathay Pacific.
The share of domestic carriers will exceed half when combined with subsidiaries. At the end of last year, Korean Air’s share of domestic flights was 22.9% and Asiana Airlines’ share of 19.3%. The market share of the low cost carriers (LCCs) of both companies such as Jin Air, Air Busan and Air Seoul is 62.5%.
As of last year, the sales of Korean Air (12.683.4 billion won) and Asiana Airlines (2.18 trillion won) have combined to reach 15 trillion won.
In addition, costs are expected to decrease by combining maintenance and pilot training, and profitability is expected to improve through simplification of redundant routes.
However, the situation in the aviation sector, which is difficult due to Corona 19, and the opposition of internal employees should be an obstacle in the acquisition process. Korean Air is said to have recorded a surplus for the second consecutive quarter, but a “ big deal ” could be a drag as sales dropped 90% from last year in the aftermath of Corona 19. Specifically, as Asiana Airlines’ debt-to-equity ratio reached 2291% in the second quarter of this year and its debt volume exceeded 12 trillion won, internal rumors opposed the acquisition itself.
To overcome the liquidity crisis caused by Corona 19, Korean Air, which plans to apply for the infrastructure stabilization fund to the government, is also a problem to raise funds to acquire Asiana Airlines.
As a result, it is argued that Korea Development Bank invests funds in Hanjin Kal, a Hanjin Group holding company, through a paid capital increase method assigned to a third party, and Hanjin Kal acquires a stake (30.77%) of Asiana Airlines owned by Kumho Industrial.
There is also a plan for Hanjin Kal to buy new shares after issuing new shares rather than buying shares (old shares) of Kumho Industries, which are responsible for Asiana Airlines’ business difficulties.
Six unions from the two airlines, including Korean Air Pilots ‘Union, Korean Air’s Union, Korean Air Employees Solidarity Branch, Asiana Airlines Pilots’ Union, Asiana Airlines Open Pilots ‘Union and Asiana Airlines’ Union, will meet next week in the center in Seoul to discuss countermeasures.
Another variable is that KCGI, an activist private equity fund (PEF), which has confronted President Cho Won-tae over management rights of the Hanjin group, opposes the acquisition of Asiana Airlines. KCGI pointed out that it is a reasonable doubt on the preservation of the current executive position while ignoring the rights of the other shareholders.
The KCGI-Jo Hyeon-ah Alliance, which owns 45.23% of Hanjin Kal’s stake, is known to be concerned that President Won-tae Cho’s influence could increase if KDB becomes the third largest shareholder. by Hanjin Kal.
【Youth Daily = Reporter Lee Seung-gu】
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