What are the details?

Korean Air has struggled to stay operational, like many other airlines in the world today during this crisis.

South Korea has seen passenger numbers fall a staggering 84%, from 10.6 million passengers in January to only 1.74 million passengers in March. Only half of which are international travellers.

The lack of passengers has resulted in 87% of Korean Air’s fleet remaining ground side and out of service, costing the airline part of $5.27 billion USD shared across the industry in lost sales for the period.

Korean Air was also one of the first airlines to be affected by the virus, with a hot spot banning the carrier from Israel and becoming the first airline to ground the Airbus A380 worldwide. 

Korean Air didn’t idly sit by, with the airline putting 70% of its workforce on leave, and executives taking a 50% pay cut for the period. The airline has also started to sell off unrelated to aviation assets such as land in the city centre of Seoul and shares in tourism companies.

Korean Air is reaching out for government aid and shareholder funds (Photo: Getty).

What is the new plan?

Revealed in a press release to Simple Flying today, the airline has launched a new plan to secure KRW 2.2 trillion ($1.79 billion USD) to overcome COVID-19.

This money will come from two different sources. The first KRW 1 trillion will be from new shares issued to the stock market. The new shares will first be on offer to existing shareholders, and any remaining not bought will be offered to the general public. Approximately 79.3 million shares will be on sale for around KRW 12,600 each ($10 USD each).

This issuing will almost double the number of shares on the market for the airline, increasing from 95 million shares to 175 million. The listing of this new offering will be in the final week of July on the 29th.

Another KRW 1 trillion will come from government aid packages. KRW 700 billion in asset-backed securities and bonds will be secured from the government as part of the industry-wide aid offerings, with an additional KRW 300 billion in bonds from government banks such as the Korea Development Bank and The Export-Import Bank of Korea.

The last KRW 200 billion well come as a loan from the above banks.

Whether or not this will be enough to last through the rest of the aviation crisis remains to be seen. Further radical action may need to be taken by the carrier to weather this storm.

Cre: Simple Flying

Nguyen Mai Huong-COMM