COVID-19: Korean Air seeking US$1.79 billion in new funding

Airline plans to issue new shares to help deal with COVID-19 liquidity crisis

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Workers cleaning and disinfecting a Korean Air plane as part of its fight against the coronavirus. (PHOTO: Korean Air)

Korean Air said Wednesday (13 May) that it plans to issue new shares to secure 2.2 trillion won (US$1.79 billion)  worth of funds to overcome the liquidity crisis caused by COVID-19. At a board meeting Wednesday the airline said it plans to issue new shares to raise 1 trillion won as well as receive government aid.

A screenshot of the virus tracking site at Johns Hopkins University taken on 13 May. To access the live site, click on the image. (PHOTO: Matt Driskill)

The airline will increase paid-in capital by first allocating newly issued shares to shareholders and then opening up remaining shares to the public. A total of 79,365,079 million shares of its stock are planned to be issued at KRW 12,600 each. The total number of Korean Air’s issued shares will increase from 95,955,428 to about 175 million shares. The final issue price will be confirmed on 6 July 2020 and the listing of new shares will take place on 29 July.

Korean Air’s board of directors decided to receive 1.2 trillion won of government aid in the form of 700 billion won of asset-backed securities based on cargo sale bonds and 300 billion won worth of perpetual bonds with stock conversion rights through the Korea Development Bank and the Export-Import Bank of Korea. The board also decided to receive an asset-backed loan of 200 billion won.

“Korean Air will continue to carry out self-rescue measures to overcome the dismal business environment due to COVID-19,” the airline said. “As part of the airline’s efforts, its executives have forgone up to 50 percent of their salaries and 70 percent of the airline’s employees have gone on leave. Also, in an effort to further increase liquidity, Korean Air is in the process of selling non-core assets such as land in the city centre of Seoul and shares in Wangsan Leisure Development.”

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Asian Aviation
Matthew Driskill is the Editor of Asian Aviation and is based in Cambodia. He has been an Asia-based journalist and content producer since 1990 for outlets including Reuters and the International Herald Tribune/New York Times and is a former president of the Foreign Correspondents Club of Hong Kong. He frequently appears on international broadcast outlets like CNN, Al Jazeera and the BBC and has taught journalism at Hong Kong University and the American University of Paris. Driskill has received awards from the Associated Press for Investigative Reporting and Business Writing and in 1989 was named the John J. McCloy Fellow by the Graduate School of Journalism at Columbia University in New York where he earned his Master's Degree.

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