Korean Air to Hold Board Meeting on 13th to Discuss Paid-in Capital Increase Up to 1 Trillion Won

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] As the aviation industry continues its 'march of hardship' due to the novel coronavirus disease (COVID-19) crisis, Korean Air will hold a board meeting on the 13th to formally discuss the issue of a rights offering.

According to industry sources on the 11th, Korean Air will hold a board meeting on the morning of the 13th to discuss whether to proceed with a rights offering. The company's first-quarter earnings are also expected to be reviewed at this meeting.

Korean Air has recently been facing liquidity difficulties due to the COVID-19 crisis and has been considering a rights offering worth up to 1 trillion won. The financial authorities, which proposed a financial support plan of 1.2 trillion won, have also continuously urged Korean Air to prepare a self-rescue plan.

Industry insiders expect that this rights offering will be conducted through a shareholder allocation followed by a general public subscription for any unsubscribed shares. In this case, Hanjin KAL, which holds about 29.96% of Korean Air's shares, will need to raise approximately 300 billion won. Since Hanjin KAL's cash and cash equivalents amount to only about 140 billion won, it is anticipated that measures such as collateral loans using affiliate shares will be employed.

Some speculate that Korean Air may consider selling valuable business units such as its in-flight catering division or aircraft maintenance, repair, and overhaul (MRO) division. In fact, Korean Air recently requested consulting services from Credit Suisse regarding business restructuring.

However, an industry official stated, "I understand that these matters will not be discussed at least in this board meeting," adding, "Korean Air would likely want to keep the sale of these business units as a last resort."

Meanwhile, Korean Air plans to announce its first-quarter earnings following this board meeting. Securities firms and industry insiders expect Korean Air to record an operating loss in the range of 100 to 200 billion won due to the impact of the COVID-19 crisis.

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