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| Korean Air B787-9 / Courtesy of Korean Air |
By Kim Hyun-bin
Korean Air might have received the green light from shareholders allowing it to conduct a capital increase for its planned takeover of Asiana Airlines but there are still numerous obstacles the airline will need to resolve.
Last month, a local court rejected an injunction filed by a local equity fund against Hanjin KAL's stock sale to fund its affiliate Korean Air's acquisition. In the meantime, 70 percent of the airline's shareholders voted in favor of an amendment of its articles of association in order for it to offer 2.5 trillion won worth of stocks to pay for the buyout.
According to industry analysts, Korean Air is scheduled to conduct the capital increase March 12.
Last month, the company provided a down payment of 3 billion and is set to handover a second payment of 4 billion won on March 15, while the remaining 1.5 trillion won will be paid June 30, which will give it a 63.9 percent in Asiana Airlines.
However, the Korea Fair Trade Commission (FTC) is still conducting an evaluation on financing issues surrounding the acquisition, and whether or not it will constitute the forming of a monopoly.
On January 14, Korean Air is set to report the takeover to the relevant regulatory authorities in the U.S., China, Japan and the EU, as well as here.
The COVID-19 pandemic has taken a toll on airlines and some industry watchers worry that in the current environment it will be difficult for Korean Air to increase its capital.
If the company is unable to raise the total amount required, it will still use all the available money to purchase Asiana shares.
If Korean Air successfully concludes the acquisition in June, it still faces securing financial stability and reorganizing Asiana Airlines share structure.
