Seoul Songhyeon-dong Site 'Park Development' Plan... Cho Won-tae Says "We Should Just Keep It" (Comprehensive)

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Chairman Cho Won-tae of Hanjin Group visited the funeral hall of the late Kim Bong-hwan, former National Assembly member and father-in-law of Sohn Kyung-shik, Chairman of the Korea Employers Federation, set up at Asan Medical Center in Seoul on the afternoon of the 28th. After paying his respects for about 20 minutes, he returned home. Photo by Lee Ki-min victor.lee@

[Asia Economy Reporters Yu Je-hoon and Lee Ki-min] Regarding Seoul City's official decision to convert the key asset in Korean Air's self-rescue plan?the Jongno Songhyeon-dong site (36,642㎡)?into a park, Cho Won-tae, Chairman of Hanjin Group, stated that he intends to "just keep it." Despite Korean Air being cornered by the COVID-19 pandemic, he indicated that if the Songhyeon-dong site cannot be sold at a proper price, the company may withdraw its intention to sell.

On the 28th at around 5:47 p.m., Chairman Cho visited the funeral hall at Seoul Asan Medical Center to pay respects for the late Kim Bong-hwan, former National Assembly member and father-in-law of Son Kyung-sik, Chairman of the Korea Employers Federation. After about 20 minutes of condolence, he spoke to reporters and made these remarks.

Earlier, on the afternoon of the 27th, Seoul City submitted the 'Songhyeon-dong Korean Air Site Park Decision Plan' for advisory review at the 7th Urban and Architectural Joint Committee meeting. The main advisory item was to change the land use of the Songhyeon-dong site to 'Cultural Park' under urban planning facilities to provide an open space for citizens. If the site’s use is changed to a park as planned by Seoul City, development will become impossible. Consequently, Korean Air’s plan to sell the land to raise funds will be impacted. The sale of the Songhyeon-dong site is considered a core part of Korean Air’s self-rescue plan.

Previously, as Korean Air faced a liquidity crisis due to the COVID-19 outbreak, it requested support from the government and creditors and prepared a self-rescue plan. The creditors demanded capital expansion of about 2 trillion KRW by the end of next year, and Korean Air decided to raise 1 trillion KRW through a paid-in capital increase and to sell the Songhyeon-dong site and Wangsang Leisure Development Co., Ltd.

However, Seoul City’s declaration to convert the Songhyeon-dong site into a park has posed an immediate obstacle to Korean Air’s self-rescue plan. Land appraisal prices are mostly based on publicly announced prices, and if the land use changes to a cultural park where construction is prohibited, the appraisal price may fall below the public price. The official land price of the Songhyeon-dong site was 8,457,000 KRW per square meter (2019 standard). Considering the site area of 36,642㎡, the value is about 310 billion KRW. The industry has estimated the market price based on the official land price to be at least 500 billion KRW, and possibly as high as 700 to 800 billion KRW. Korean Air needs to secure the highest possible price to raise capital and refinance loans, but buyers are unlikely to pay such prices for land with restricted use. Some speculate that Seoul City’s land use change is intended to lower the land price for this reason.

Seoul City plans to acquire the Songhyeon-dong site through a private contract, but in this case, Korean Air is unlikely to receive a fair price. A Seoul City official said, "We need to conduct an appraisal, but we expect the price to be lower than the market figure of 500 billion KRW."

Within the industry, there are concerns that if Korean Air fails to secure sufficient funds through the sale of the Songhyeon-dong site, it may consider selling even essential assets for business continuity. Currently, discussions include the sale of non-core assets such as the LA Wilshire Grand Hotel, as well as restructuring of core business units like in-flight catering, aircraft maintenance (MRO), and mileage programs. Chairman Cho dismissed these concerns, saying, "Nothing has been decided yet."

Meanwhile, regarding the shareholder coalition (known as the '3rd party coalition') that is engaged in a management rights dispute and filed a lawsuit to cancel resolutions of the Hanjin KAL regular shareholders' meeting in March, Chairman Cho said, "I have not yet received the complaint, so I have not reviewed it." He also avoided detailed comments on the coalition’s additional acquisition of Hanjin KAL shares, saying, "There is nothing that can be done."

Earlier, the 3rd party coalition filed two injunctions before the March shareholders' meeting: one to prohibit the exercise of voting rights by the Korean Air Labor Union (3.7%), considered an ally of Chairman Cho, and another to allow the exercise of voting rights by shares held by Bando Construction. Both injunctions were dismissed, resulting in a complete defeat for the coalition at the March shareholders' meeting. Despite the loss, the coalition announced plans to continue contesting unfair aspects through main lawsuits, signaling a second round of legal battles.

A representative of the 3rd party coalition explained, "We already stated after the shareholders' meeting that we would examine the issues through the main lawsuit. Since the lawsuit to cancel resolutions must be filed within two months after the meeting, we initiated the lawsuit on the 26th as the deadline approached."

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