Asiana Airlines Receives Total 2.4 Trillion KRW Support from the Period Industry Stabilization Fund

[Asia Economy Reporter Kangwook Cho] A total of 2.4 trillion KRW in the Industrial Stabilization Fund will be provided to Asiana Airlines, whose sale has fallen through, including 2.1 trillion KRW for market stabilization funds and 300 billion KRW for liquidity shortage funds.

On the 11th, the Korea Development Bank announced that the 15th Fund Management Committee of the Industrial Stabilization Fund held a meeting and approved the support for Asiana Airlines from the Industrial Stabilization Fund as described.

The support amount totals 2.4 trillion KRW, consisting of 2.1 trillion KRW in market stabilization funds to cover repayment of financial debts (ABS, financial leases, etc.) that would become due if the credit rating falls due to the failed M&A, and 300 billion KRW for liquidity shortage funds. The support method includes 1.92 trillion KRW (80%) in operating fund loans and 480 billion KRW (20%) in perpetual convertible bonds (CB) acquisition.

However, the Industrial Stabilization Fund expects that if Asiana Airlines’ credit rating is maintained through this fund support, the loan amount will significantly decrease.

Asiana Airlines, which will receive the fund support, plans to comply with the support conditions stipulated in the Korea Development Bank Act, such as maintaining employment, efforts to improve management, prohibition of profit dividends, and prohibition of salary increases for high-income earners.

The Fund Management Committee has conducted in-depth discussions through several meetings since early July regarding the progress of the M&A with HDC Hyundai Development Company as well as the necessity of support from the Industrial Stabilization Fund.

It is known that due to the high variability of the novel coronavirus infection (COVID-19), it was difficult to predict matters related to Asiana Airlines’ future management outlook.

Given the prolonged COVID-19 crisis affecting the entire aviation industry, if Asiana Airlines’ M&A had failed, it was expected to cause massive unemployment and significantly weaken the competitiveness of the domestic aviation industry, resulting in enormous economic losses for the country. Therefore, after thorough discussions, the Fund Management Committee decided to support Asiana Airlines with the Industrial Stabilization Fund.

The Korea Development Bank evaluated, "This Industrial Stabilization Fund support timely played the role of a market safety net by early blocking the spread of instability in the domestic economy caused by COVID-19 and greatly contributing to employment market stability."

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