Skip to content
  • KOSPI 2330.77 -13.14 -0.56%
  • KOSDAQ 783.33 +5.31 +0.68%
  • KRX100 4973.82 -21.32 -0.43%
  • USD/KRW 1129.1 -5.50 -0.49%
  • JPY100/KRW 1,076.72 -6.79 -0.63%
  • EUR/KRW 1,333.47 -10.52 -0.79%
  • CNH/KRW 169.09 -0.87 -0.51%
Visit Market Data
Korean Air

Korean Air seals $835 mn in-flight business sale to private equity firm

Aug 25, 2020 (Gmt+09:00)

Korean Air Lines Co. Ltd. signed a definitive agreement on August 25 to sell its in-flight duty-free and meal service business to South Korea’s No. 2 private equity firm Hahn & Company for 990.6 billion won ($835.4 million), as part of its self-rescue measures to ease liquidity problems.

Under the deal, the in-flight business division will be transferred to a special purpose company (SPC) to be set up by Hahn & Co. Korean Air will take a 20% stake in the SPC to align the interests of both companies for the business, according to industry sources.

It is expected to take a couple of months before finalizing the deal.

The sale came on the heels of Korean Air’s capital increase of 1.1 trillion won last month. Reeling from the effects of COVID-19, the flagship carrier was urged to raise a combined 2 trillion won in fresh capital, in return for the capital injection of 1.2 trillion won from creditors in April.

Now that the carrier has met its capital-raising goal, the latest deal may calm market speculation about the possible sale of other core assets such as its airplane maintenance, repair and overhaul business.

The in-flight division was the first in line among the assets Korean Air has been reviewing for sale. Korean Air is planning to sell a 37,000 square-meter parcel of land in central Seoul for approximately 500 billion won. The city of Seoul recently offered to buy the undeveloped land.

It is also in talks to dispose of a stake in an amusement and theme park operator west of Seoul, while entering negotiations to refinance its debts on Wilshire Grand Center in Los Angeles, a landmark commercial building.

As part of its self-rescue efforts following the coronavirus outbreak, Korean Air suspended the majority of its international flights and placed over 70% of its employees on paid or unpaid leave.

By Kyung-min Kang

kkm1026@hankyung.com

Yeonhee Kim edited this article

Comment 0

0/300

0/5 articles left. Sign in for unlimited access to all articles.