Korean Air to Issue ESG Bonds Worth 200 Billion KRW in Early Next Month

Final Issuance Amount Decided After Demand Forecast
Utilization of Funds Related to Boeing 787 Introduction

[Asia Economy Reporter Dongwoo Lee] Korean Air announced on the 25th that it will issue ESG (Environmental, Social, and Governance) bonds on the 7th of next month, becoming the first domestic airline to do so. The bonds will have maturities of 1.5 years, 2 years, and 3 years, totaling 200 billion KRW. The final issuance amount will be determined based on the demand forecast scheduled for the 29th.

ESG bonds are bonds whose issuance funds are used for investments that create environmental and social value. Accordingly, they are classified into green bonds, social bonds, and sustainability bonds. Although public enterprises, financial institutions, and manufacturing companies have issued ESG bonds domestically in the past, Korean Air is the first domestic airline to issue ESG bonds.

To issue ESG bonds, the use of funds must align with the intended purpose. The ESG bonds issued by Korean Air will be green bonds, with funds used for the acquisition of the next-generation eco-friendly aircraft, the Boeing 787.

Currently, Korean Air operates a total of 10 Boeing 787-9 aircraft and plans to add Boeing 787-10 aircraft starting next year. In particular, the Boeing 787-10 has 25% higher fuel efficiency per seat and emits 25% less carbon compared to other aircraft of the same class.

Korea Ratings, which conducted the ESG financial certification evaluation for Korean Air, stated, “Korean Air achieved excellent results in the two major evaluation categories of ‘project eligibility’ and ‘management, operational system, and transparency.’”

Especially for the Boeing 787 model, which will be funded by this green bond issuance, the greenhouse gas reduction effect was recognized to be at a level similar to that of eco-friendly vehicles, awarding it the highest grade, GB (Green Bond) Level 1.

Korean Air has focused on reducing carbon emissions by introducing next-generation eco-friendly aircraft and operating procedures and organizations to improve fuel efficiency. Leveraging the characteristics of the aviation industry, it has fulfilled its social responsibilities by providing relief supplies during domestic and international disasters.

To improve governance, Korean Air has separated the roles of CEO and chairman of the board since 2020 and appointed all members of the Outside Director Candidate Recommendation Committee as outside directors, making efforts to enhance governance transparency and the independence of the board. In the same year, it established an ‘ESG Committee’ composed entirely of outside directors to oversee the company’s ESG-related matters and carefully review major management issues that significantly impact shareholder value and rights.

Korean Air stated, “We plan to actively pursue management activities that incorporate non-financial factors such as environment, society, and governance, which have a significant impact on corporate value and sustainable growth potential.”

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