Korean Air Chairman Cho Won-tae answers questions from reporters at a press conference held on the sidelines of the 75th IATA AGM meeting in Seoul on June 3, 2019. (Yonhap)
SEOUL, Jun. 3 (Korea Bizwire) — Korean Air Lines Co. is looking at Asiana Airlines Inc., which is up for sale by its parent company, Kumho Asiana Group, the national flag carrier’s chairman said Monday.
“It is a very sensitive issue to comment on but we are looking at the deal,” Korean Air Chairman Cho Won-tae said in a press conference held on the sidelines of the 75th International Air Transport Association (IATA) Annual General Meeting in Seoul.
Korean Air and Asiana Airlines are the country’s two full-service carriers. If the former acquires the latter, the new entity would be the biggest full-service airline in Korea, along with six low-cost carriers.
Conglomerates, such as SK, CJ, Hanwha, and Aekyung, have been mentioned as potential bidders for Asiana though they have denied plans for a purchase.
Kumho Asiana plans to sell a 33.5-percent stake in Asiana Airlines held by affiliate Kumho Industrial Co. within this year as part of its broad restructuring efforts.
Ernst & Young accounting firm is expected to complete a due diligence study on Asiana by the end of July. Credit Suisse is advising the deal.
To ride out the South Korean won’s weakness against the U.S. dollar, tougher competition with low-cost carriers and rising fuel prices, the company will take a “more aggressive strategy” going forward, Cho said.
“Over the past 10 years, Korean Air has pushed forward a strategy that differentiates itself from others in services. We have recently felt an urgent need to take some measures to respond to budget carriers that are strengthening their presence in the airline industry,” the chairman said.
He didn’t elaborate on what measures will be taken by the Korean flag carrier.
As for other challenges, he said the ongoing U.S.-China trade war is “definitely affecting” Korean Air’s cargo business though its passenger air service remains robust.
In the January-March quarter, Korean Air saw its net losses deepen to 61.8 billion won (US$52 million) from 10.04 billion won a year earlier due to the local currency’s weakness which pushed up the company’s jet fuel purchasing costs and the value of foreign debts.
Its budget carrier unit, Jin Air Co., posted a 21 percent on-year decline in its first-quarter net profit at 31.8 billion won.
Cho Won-tae took the helm of Korean Air after his father and late Chairman Cho Yang-ho died of a chronic illness on April 8.
On Sunday, he was elected as a member of the board of governors at the IATA annual general meeting where his late father served as a board member for eight years from 1996.
(Yonhap)
