"Seoul's Songhyeon-dong Site Parkification Plan Must Be Withdrawn, Direct Violation of Private Property Rights"

KCCI's Opinion Submitted to the Anti-Corruption Commission on Seoul City's Plan to Designate Korean Air-Owned Songhyeon-dong Site as a Cultural Park
"Direct Infringement on Private Property Rights and a Major Blow to Korean Air's Self-Help Efforts"

[Image source=Yonhap News]

KEF, Submits Opinion to Anti-Corruption Commission: "Seoul City's Unilateral Push for Songhyeon-dong Site Cultural Park Severely Violates Private Property Rights"

[Asia Economy Reporter Kim Hyewon] The business community has expressed the view that Seoul City's push to convert the Songhyeon-dong site into a park is a direct infringement on private property rights and a blow to Korean Air's self-help efforts.

The Korea Employers Federation (KEF) stated on the 30th in its "Opinion on Seoul City's Plan to Designate Korean Air-Owned Songhyeon-dong Site as a Cultural Park," that "Seoul City's unilateral designation of the Songhyeon-dong site as a cultural park directly infringes on private property rights and shifts the public burden of local government on public goods onto the private sector, placing Korean Air in a very unfair situation."

KEF pointed out, "Seoul City should promptly withdraw its plan to designate the Songhyeon-dong site as a cultural park so that Korean Air can overcome the COVID-19 management and employment crisis through self-help measures, allowing the private market mechanism to facilitate the sale and realize the private property value normally."

KEF submitted this opinion to the Anti-Corruption and Civil Rights Commission, which is mediating between the two parties, on the 28th. It is unusual for KEF to comment on specific cases of individual companies, but it appears they judged that the Songhyeon-dong site conflict negatively affects the self-help efforts of the aviation industry, which has been hit hard by COVID-19.

Korean Air, While Pursuing Sale of Songhyeon-dong Site as Part of Self-Help Measures... Seoul City Announces Cultural Park Designation Plan Without Consultation

Since early February, as the damage to the aviation industry caused by COVID-19 became apparent, Korean Air has been promoting the sale of idle assets, including the Songhyeon-dong site, to improve its financial structure and secure liquidity. Meanwhile, Seoul City announced on June 5th its plan to designate the Songhyeon-dong site as a cultural park without prior consultation with Korean Air, leading to conflict between the two sides. For Korean Air, this disrupted the sale plan and procedures for the site.

KEF criticized, "From Korean Air's perspective, the sale of the Songhyeon-dong site is a key self-help measure in terms of price and financing," and "Seoul City's push for park development is a measure that deals a significant blow to Korean Air's desperate self-help efforts."

Korean Air union members hold a press conference in front of Seoul City Hall on the 11th, urging a free competitive bidding for the Songhyeon-dong site. Photo by Kim Hyun-min kimhyun81@

In fact, following Seoul City's announcement of the Songhyeon-dong site park plan, no bidders participated in the official sale bid held by Korean Air on June 10th. Before Seoul City's announcement, it was reported that 15 companies had unofficially expressed interest in purchasing.

KEF's position is that if Seoul City had not made the announcement, the sale price of the Songhyeon-dong site could have been formed at a high level based on market principles, considering surrounding values and market prices.

KEF: "Seoul City Lacks Budget to Secure Site, Long-Term Installment Payment Inevitable"… Korean Air Union Also Issues Statement Expressing Concern Over "Increased Employment Instability"

KEF analyzed, "Seoul City has not formally secured a budget for the park site and is expected to purchase at a price significantly lower than the market price," adding, "Korean Air needs to secure funds from a lump-sum sale, but Seoul City is expected to pay in installments over a long period."

KEF further stated, "While the global trend is for governments to support companies to overcome the current force majeure crisis, Seoul City is instead undermining companies' self-help efforts to overcome management crises," and insisted, "If Seoul City intends to proceed with park development, it must purchase at a market price through private market transactions to guarantee private property rights."

They added, "Especially, Korean Air's sale of the Songhyeon-dong site must be absolutely considered as a desperate self-help effort to overcome corporate survival and employment instability amid the COVID-19 situation." In this regard, the Korean Air Labor Union also issued a statement on June 11th expressing concern that Seoul City's cultural park designation would exacerbate employment instability.

Korean Air's debt to be repaid by the end of the year amounts to 3.8 trillion won. The creditors provided 1.2 trillion won to Korean Air in April and, through a special agreement, required Korean Air to increase capital by 1.5 trillion won by the end of this year and a cumulative 2 trillion won by the end of next year.

Due to the prolonged COVID-19 crisis, Korean Air is pursuing various self-help measures to secure short-term operating funds for principal and interest repayments on trillion-won scale debts, labor costs, and fixed costs, beyond the creditors' demands. On the 25th, it signed a contract to sell its in-flight meal and in-flight sales business for about 1 trillion won, and the sale of Wangsang Marina is also underway.

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