Wednesday, 10 April 2019

Last chance revamp for South Korea's Asiana

Photo Airbus
The Kumho Asiana Group has informed its top creditor that it will sell off Asiana Airlines Inc should the latest restructuring plan fail to be implemented fully over the next three or so years.

The pledge was offered to the Korea Development Bank (KDB), which also included a request for yet more financial support, this time in the region of around $439 million, according to a KDB statement.

Boss  Park Sam-koo had to resign as chief executive of both Asiana Airlines and its biggest shareholder, Kumho Industrial Co Ltd, last month after accounting irregularities caused concern about the group’s liquidity. Part of the Kumho Asiana group suggestions included that stakes owned by founding family members, Park Sam-koo, be passed to the creditors.  

Asiana Airlines had to revise 2018 accounts and report a much bigger annual loss to win approval from an auditor that had previously refused to sign off the accounts.  Reuters reports that the auditor’s initial rejection triggered warnings of credit-rating downgrades.

The airline also recently stated it might sell assets, cut routes and reduce its fleet size as it moves forward to a cost-cutting programme to overcome its financial difficulties. The newly promoted co-chief executive Han Chang-soo wrote a letter to staff at the beginning of the month, explaining a task force was to be set up to oversee all the restructuring and cost-cutting efforts. The letter said the network will be restructured to focus on profitable routes, which in turn would obviously lead to a reduction in aircraft numbers. At this stage, it is unclear which routes will be cut or which aircraft will be disposed of. 

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