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Creditor bank considering deal for Asiana Airlines to be sold to Korean Air's parent

Asiana Airlines Inc's main creditor said on Friday it was considering a deal for the debt-ridden carrier to be sold to the parent company of rival Korean Air Lines Co Ltd. Shares in Asiana, which is saddled with some $11.5 billion in debt and saw talks to another group collapse in September due to the coronavirus pandemic, surged more than 10% on the news, valuing it at just under $900 million.

Reuters | Updated: 13-11-2020 10:08 IST | Created: 13-11-2020 09:30 IST
Creditor bank considering deal for Asiana Airlines to be sold to Korean Air's parent
Representative Image Image Credit: ANI

Asiana Airlines Inc's main creditor said on Friday it was considering a deal for the debt-ridden carrier to be sold to the parent company of rival Korean Air Lines Co Ltd.

Shares in Asiana, which is saddled with some $11.5 billion in debt and saw talks to another group collapse in September due to the coronavirus pandemic, surged more than 10% on the news, valuing it at just under $900 million. Hanjin Group, the owner of South Korea's top airline Korean Air, has been in talks with main creditor Korea Development Bank (KDB) and will submit a letter of intent to the bank as early as next week, the Korea Economic Daily reported.

KDB said a purchase by Hanjin Group was one option under consideration but did not say what the other options were. Asiana declined to comment while Hanjin Group said nothing has been decided. "The sale itself is a good news for Asiana Airlines ... Korean Air will likely benefit from the country's No. 2 full service carrier dropping out of competition, while the integration may bring positive outcomes for South Korea's aviation industry," said Lee Han-joon, an analyst at KTB Investment & Securities.

Shares in Korean Air were, however, flat in Friday late morning trade while those for Hanjin Kal, the holding company for the Hanjin Group tumbled 7%. Lee said Asiana might need to find other buyers for two budget carriers, Air Busan and Air Seoul, as Korean Air has its own budget affiliate Jin Air.

The carrier, which employs roughly 9,000 people, operates 29 passenger routes with 72 passenger aircraft of June. Prior to the pandemic it was operating 85 passenger routes and had been restructuring heavily after an accounting fiasco in 2019. Hyundai Development Co and brokerage Mirae Asset Daewoo had agreed in December 2019 to purchase control of Asiana for about 2.5 trillion won ($2.3 billion), but they called for better terms after the pandemic caused its debt to surge. ($1 = 1,112.5800 won)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)


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