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| Officials from Asiana Airlines load freight on its A350 passenger jet at Incheon International Airport on Sept. 24. The cash-strapped airline converted the passenger plane into a cargo carrier to tackle a virus-induced sales drop. Yonhap |
By Lee Min-hyung
With major creditors of Asiana Airlines failing to find a potential buyer for the cash-strapped carrier, a feasible scenario is emerging that the Korea Development Bank (KDB) will let Korean Air handle Asiana's long-haul business, industry sources said Friday.
The timely sales of the nation's second-largest carrier comes as a top priority for the main creditor, which recently signed a consultation contract with two management consultancies ― EY Hanyoung and Bain & Company.
But for the creditor and Asiana, there are only a few limited options to choose from to ensure a rapid normalization of the airline's business as its financial soundness deteriorates. The creditors ― led by the KDB ― decided to provide 2.4 trillion won to Asiana as part of an emergency loan to prevent the firm falling into a prolonged capital impairment, which may result in possible delisting from the local stock market.
Industry watchers believe it will be very tough for Asiana to find a buyer at least until the end of this year due to the aviation industry's dismal outlook for recovery from the COVID-19 pandemic.
Therefore, the creditors are considering selling parts of the firm's major businesses ― such as its license to operate a long-distance route ― to Korean Air, the largest carrier that is showing signs of bouncing back from the virus shock. The company is the only airline here to have reported an operating profit ― 7.6 billion won ― during the third quarter, while others reported tens of billions of won in losses.
"This is one of the feasible scenarios that the Asiana creditors consider when few companies are showing interest in purchasing a controlling stake in the airline," an industry source said.
Earlier, Hyundai Development Company (HDC) abandoned its plan to buy Asiana, citing the latter's falling corporate value amid a weak outlook even after the virus subsides.
The creditors are known to have persuaded Korean Air to consider acquiring Asiana, as the possible deal between the two airlines could minimize the potential side effects and risks due to their connection in business. If the scenario becomes a reality, Asiana Airlines will transform itself into the nation's largest low-cost carrier operating with the focus on short-haul and domestic flights.
"Creditors are in the final phase of their internal review to decide their possible next steps, and the sale of Asiana's long-haul flight businesses to Korean Air is one option," the source said.
Creditors maintained a "low-key" attitude, saying they were waiting for the consulting partners' analysis results.
"They will release the results sometime early next year, and specific roadmaps as to what the KDB will do for Asiana's normalization will be unveiled around that time," an official from a creditor said.
A Korean Air spokesperson also declined to confirm details over whether it has plans to take over parts of Asiana's businesses.
"Nothing specific has been decided for now, as we are also going all-out to normalize our business which is in dire need of capital," an official from the airline said. "The scenario of Korean Air's acquisition of Asiana's long-haul business is too premature to say, as we have hardly resumed our long distance international flights."
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