Will Delta stick to old friend, keep Korean carrier in Cho family's hand?

With Hoban Group’s stake in Hanjin KAL nearly matching that of Hanjin Group Chairman Cho Won-tae and his interested parties, Delta Air Lines and Japan Airlines (JAL) are emerging as potentially crucial allies in maintaining the Cho family's control of Korean Air.

As Hoban closes in on Cho’s stake in Hanjin KAL, Korean Air’s controlling shareholder is counting on its old ally, Delta Air Lines, to help hold the line.

Delta owns a 14.9 percent stake in Hanjin KAL, making it one of the largest shareholders and a key pillar of Cho’s shareholder base. The U.S. carrier has also maintained a deep strategic relationship with Korean Air for years, and is widely considered to stand in favor of Cho’s leadership.

That support could become increasingly important as the ownership structure tightens.

Hoban now owns 20.15 percent of Hanjin KAL, just 0.42 percentage point below Cho and his related parties. The gap is small enough to turn every major shareholder into a potential kingmaker, particularly as Korea Development Bank (KDB) still holds a 10.58 percent stake and has yet to decide when and how to exit.

Delta has already made its position toward Cho clear. At a press conference in June last year, Delta said the airline had high confidence in Cho and the current management, while describing Korean Air as a proud partner. Delta has continued to deepen its partnership with Korean Air through their trans-Pacific joint venture.

Delta’s 14.9 percent stake gives it considerable influence, but it does not automatically make the carrier a permanent voting ally of Cho. In a potential control battle, Delta would have to weigh its long-term partnership with Korean Air against its own financial interests.

JAL’s recent move makes that calculation more complicated.

Earlier this month, the carrier disclosed that it acquired Hanjin KAL shares alongside a new strategic partnership with Korean Air. The size and purchase price were not disclosed, but the absence of a 5 percent-or-more ownership filing indicates that JAL’s stake is likely below 5 percent.

JAL’s entry gives Cho another potential ally, just as Hoban’s stake gets higher.

Still, the numbers show why Cho cannot afford complacency.

Even if Delta and JAL side with him, the eventual destination of KDB’s 10.58 percent stake could alter the balance dramatically. If those shares were acquired by Hoban, its stake would rise to 30.73 percent, fundamentally changing the shareholder landscape.

“The status quo leaves Cho with a crucial task of turning the commercial partnerships with the two overseas carriers into durable shareholder support before KDB begins its exit,” an industry official said.