The 1st Anniversary of the Late Cho Yang-ho... Hanjin Group Still in 'Turbulence'

Despite Internal and External Challenges, Korean Air on Solid Ground
Turbulent Family History... Hardships in Later Years Including the 'Peanut Incident'
Third-Generation Cho Won-tae Era Begins in Earnest
Ongoing Management Disputes and COVID-19 Crisis Persist

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] It has been one year since the sudden passing of the late Cho Yang-ho, Chairman of Hanjin Group, on the 8th. After Chairman Cho Yang-ho's death, Hanjin Group officially established the 'Cho Won-tae system,' ushering in the third-generation management era, but the group remains embroiled in turmoil due to the ongoing 'sibling rivalry' and the unprecedented crisis caused by the novel coronavirus disease (COVID-19).

According to the business community on the 7th, Hanjin Group will hold a memorial event at Singal Seonyeong in Hagal-dong, Yongin-si, Gyeonggi Province, on the 8th to mark the first anniversary of the late Chairman Cho Yang-ho. Considering the prevention of COVID-19 spread and the difficult aviation industry conditions, the memorial will be quietly held with attendance from group executives including Chairman Cho Won-tae.

◆On the Foundation of Korean Air... A Family History That Was Not Smooth = Born as the eldest son of founder Cho Jung-hoon, Cho Yang-ho joined Korean Air in 1974 and devoted 45 years to the aviation industry, earning recognition as a leader who placed Korean Air on a solid foundation.

Under Chairman Cho Yang-ho's leadership, Korean Air overcame significant internal and external adversities such as a series of airline accidents in the 1990s, the foreign exchange crisis (1997-1998), the 9/11 terrorist attacks (2001), the Severe Acute Respiratory Syndrome (SARS) outbreak (2003), and the Middle East Respiratory Syndrome (MERS) outbreak (2015), maintaining its status as a leading domestic carrier.

Building on this, Cho Yang-ho played a leading role in founding the international airline alliance SkyTeam and served as an executive in the International Air Transport Association (IATA). He also contributed to the successful bid for the 2018 Pyeongchang Winter Olympics as the chairman of the bidding committee.

However, his family history was far from smooth. Early in the succession process, he faced a 'prince's rebellion' represented by minor executives, and in his later years, his family was embroiled in multiple controversies involving abuse of power and legal violations, starting with the 'nut rage' incident involving his eldest daughter, former Korean Air Vice President Cho Hyun-ah. Due to growing public outrage, he lost his position as an inside director at Korean Air, his lifelong workplace, shortly before his death on April 8, 2019.

◆Unfinished Sibling Rivalry and the Unprecedented COVID-19 Crisis = After Chairman Cho Yang-ho's passing, Hanjin Group saw Cho Won-tae formally begin third-generation management, but numerous challenges remain. The sibling rivalry between Chairman Cho Won-tae and former Vice President Cho Hyun-ah is ongoing. In the first round at the regular shareholders' meeting of Hanjin KAL, Cho Won-tae defended his management rights with the support of their mother Lee Myung-hee, Jeongseok Enterprise advisor, younger sister Cho Hyun-min, former executive director of Hanjin KAL, and partner Delta Air Lines. However, the three-party coalition has announced plans for a long-term battle at future shareholders' meetings, making the situation fluid.

Recently, the three-party coalition increased its stake in Hanjin KAL by purchasing 0.61% (approximately 365,000 shares), raising its shareholding to 42.74%. A business community official commented, "Sibling rivalries within groups rarely end in a single decisive battle," adding, "Since the combined shareholding exceeds 40%, the dispute is expected to continue sporadically for several years."

To make matters worse, the industry conditions have deteriorated to their worst due to COVID-19. Of the 145 passenger aircraft owned by Korean Air, about 100 are grounded at parking lots. With forecasts of trillion-won scale losses this year, Chairman Cho Won-tae faces the difficult task of overcoming both the management crisis and the challenge to his management rights simultaneously. Recently, Chairman Cho Won-tae appointed former Financial Services Commission Chairman Kim Seok-dong, who was newly appointed as an outside director, as the chairman of the board to initiate governance improvements. He has also begun actively selling idle assets as part of a comprehensive self-help effort. For employees, measures such as executive salary returns and a six-month rotational paid leave system are being implemented or discussed.

A Korean Air official stated, "Considering that the impact of the COVID-19 crisis may continue until the end of the year, we are currently formulating management plans," adding, "Efforts to streamline operations, including the sale of idle assets, will continue going forward."

This content was produced with the assistance of AI translation services.