By Kim Yoo-chul
Staff Reporter
Cash-burning Asiana Airlines got more bad news ― price fixing in its role in a cargo and passenger-fixing scheme.
The nation's second-biggest airliner, has agreed to pay $50 million after agreeing on a guilty plea for conspiring to eliminate competition by fixing both cargo rates and passenger rates from 2000 to 2006.
Specifically, Asiana is charged with participating in meetings in the U.S. and elsewhere to discuss cargo rates to be charged on certain routes and levying the rates in accordance with the agreements reached.
This illegal activity is the second time that a local carrier has admitted to price-fixing and agreed to pay the U.S. anti-trust authorities. In 2007, Korean Air was fined $300 million for similar reasons.
"We will pay the fine over five years in six installments," an Asiana spokesman said, Monday.
"Under a plea agreement, which are subject to court approval, we agreed to cooperate with the U.S. Justice Department's ongoing investigation," the spokesman added.
Shares of Asiana ended at 4,350 won on the main bourse, according to data from the Korea Exchange (KRX).
The European Union (EU) also plans to fine the local carrier soon over a similar price-fixing scheme, according to industry sources.
The decision came amid lower travel demand and higher costs stemming from the weaker South Korean currency.
Asiana said the fine won't significantly hit its financial soundness because it is lower than other international carriers.
But the company, which posted a net loss of 163.4 billion won in the fourth quarter of last year on a yearly basis, is unexpectedly selling corporate bonds to cover "operational costs."
Asiana, which already sold 200 billion won worth of corporate bonds in the first quarter of last year, plans to issue 60 billion yen worth of asset-backed securities (ABS) in a few months after selling 40 billion yen worth of asset backed securities in March, industry sources said.
Of the 200 billion won raised by Asiana, half was generated through non-guaranteed bonds sales and the other half was raised by selling bonds with warrants ― bonds that allow the holder to buy new shares of the issuer at a predetermined price.
"Asiana is forecast to post 6.3 billion won in operating losses in the first quarter as there are no clear signs of improvement in the company's balance sheet," Paek Ji-ae, an analyst at Tongyang Securities said.
"It is expected Asiana will secure more operational funds by issuing corporate bonds, and in such a situation the price-fixing news is negative," she added.
Along with Asiana, Luxembourg-based Cargolux Airlines International SA, and Japan-based Nippon Cargo Airlines Co. Ltd., were fined for conspiring to eliminate competition by fixing cargo rates on international shipments.