Korean Air Completes In-flight Meal Business Sale... Accelerates Cash Securing

[Image source=Yonhap News]

[Asia Economy Reporter Koo Eun-mo] Korean Air announced on the 17th through a disclosure that it has completed the procedure to sell its in-flight meal and in-flight duty-free product sales business to the private equity firm Hahn & Company.

On the same day, Korean Air completed the sale by acquiring 20% of the shares of the newly established company, "Korean Air C&D Service Co., Ltd.," for 96.3 billion KRW. C&D Service is a corporation established by Hahn & Company for the in-flight meal business. Previously, Korean Air signed a contract stipulating that the sale would be completed once it acquires a portion of the shares of the newly established company while transferring the in-flight meal business to Hahn & Company.

With Korean Air's acquisition of shares on this day, the shareholding ratio of C&D Service became 80% for Hahn & Company and 20% for Korean Air. Going forward, Hahn & Company will take charge of managing C&D Service as the largest shareholder, and Korean Air will enter into contracts with C&D Service for the in-flight meal and in-flight duty-free sales business.

The sale price is 990.6 billion KRW, but it is known that the actual cash secured by Korean Air is less than 800 billion KRW after paying for the acquisition of C&D Service shares and other expenses. Korean Air is securing cash by selling assets to prepare for liquidity crises caused by the impact of the COVID-19 pandemic.

Korean Air is also selling Wangsang Leisure Development, which operates the Wangsang Marina leisure facility on Yeongjongdo Island, Incheon. Last month, Kansas and Mirae Asset Daewoo were selected as preferred negotiation partners for the sale of Wangsang Leisure Development, of which Korean Air holds 100% of the shares. Korean Air's subsidiary, Korean Air Aviation Services, is also pushing to sell its airport bus business to the private equity firm Keystone Partners.

However, the sale of the Songhyeon-dong site, a key part of the self-rescue plan, has been delayed due to conflicts with the Seoul Metropolitan Government, causing some setbacks in improving the financial structure. Korean Air plans to complete the sale by June next year to secure 450 to 550 billion KRW in funds, but Seoul City has not set a deadline for the contract completion.

The Anti-Corruption and Civil Rights Commission proposed a mediation plan setting the land exchange contract deadline to April 30 next year and suggested resolving unavoidable setbacks through consultation, but Seoul City is reportedly unable to specify a transaction closing date.

Since Korean Air received an 800 billion KRW investment from the Korea Development Bank for the acquisition of Asiana Airlines, the industry views that there is no immediate risk of liquidity crisis.

Korean Air plans to use 200 billion KRW of the 800 billion KRW as operating funds. Depending on securing additional operating funds, it is expected that the company will not apply for the Industrial Stabilization Fund, which it had planned to request from the government by the end of the year, for the time being.

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