Hoban's rise gives Delta more leverage in Hanjin KAL power battle

Hoban Group’s rise as Hanjin KAL’s largest shareholder is giving Delta Air Lines greater leverage in the power struggle over Korean Air’s holding company as Chairman Cho Won-tae seeks to retain control.

Hoban and its affiliates held a 20.69 percent stake in Hanjin KAL as of Wednesday, narrowly surpassing Cho and related parties at 20.58 percent. Cho has agreed to purchase another 325,000 shares for 37.05 billion won ($27 million), which could lift his side’s stake to 21.06 percent and restore its position as the largest shareholder.

The increasingly close shareholding structure, however, has heightened the importance of major shareholders outside the two rival camps. Delta owns 14.9 percent of Hanjin KAL, while the state-run Korea Development Bank (KDB) holds 10.58 percent. Together with Cho’s stake, the three parties account for about 46 percent of Hanjin KAL.

Excluding KDB from consideration for any future Korean Air deal due to its unique status as a public financial institution, Delta is emerging as an unexpected beneficiary of the renewed power struggle between Cho and Hoban. The state-run lender recently reiterated its position that it “does not have any immediate plans to sell its Hanjin KAL stake.”

Delta has long been a strategic partner of Korean Air and is widely viewed as supportive of Cho’s leadership. The two airlines operate a trans-Pacific joint venture, while Delta has maintained a close commercial relationship with Korean Air for years. Delta's sizable stake also makes it one of the most influential shareholders outside the Cho and Hoban camps.

As Hoban continues to build its stake, Cho has a stronger incentive to keep Delta firmly on his side. That could give Delta greater leverage in future discussions involving its partnership with Korean Air, including commercial cooperation and the broader direction of the combined airline following the planned integration with Asiana Airlines on Dec. 17.

The timing is particularly significant because Korean Air is entering a major restructuring period. The company plans to integrate Asiana's operations in December and combine its low-cost carriers, making stable governance at Hanjin KAL increasingly important.

Hoban has maintained that its investment is for simple investment purposes and has not publicly announced plans to seek management participation. Industry officials, however, say Hoban’s continued purchase of Hanjin KAL's shares suggest otherwise.

For now, Delta appears to have the strongest position among Hanjin KAL’s outside strategic shareholders. Its 14.9 percent stake is large enough to matter in a control battle, while its long-standing commercial ties with Korean Air give it interests beyond a simple financial investment.

“For now, Delta Air Lines is unlikely to turn against Korean Air by selling its stake, but Cho will likely keep a close eye on how the landscape will change, as he needs to leave open all the scenarios to secure management rights in Hanjin KAL,” an official from the industry said.

Officials from Delta Air Lines were unavailable for comment.