Respite expected from new Asiana majority owner

A move by a consortium headed by South Korean builder Hyundai Development Co. to take a $US2.16 billion stake in Asiana Airlines is expected to provide a respite for Korea’s second-biggest airline. The 76.5 percent stake with Mirae Asset Daewoo Co. includes a 31 percent stake acquired from Kumho Industrial Co. Kumho announced its intention to sell its stake in the debt-laden airline in April. READ: Emirates president Tim Clark to retire in June. The agreement will see HDC, which wants to diversify its operations, with 61.5 percent of Asiana and Mirae, which is interested in developing an aviation financing business, with 15 percent. The deal includes Asiana’s subsidiaries and low-cost carriers Air Busan and Air Seoul. Asiana has been cutting routes and axed first class earlier this year focused on boosting profits. The airline in November reported a third-quarter operating loss of $US49 billion versus a profit for the previous third quarter of $US84 billion. GlobalData lead analyst Aurojyoti Bose said the acquisition would provide a breather for Asiana, which was under “deep pressure” with a debt of more than 6 trillion Korean won  ($US5.18 billion) as of September 30, 2019. “The airline’s troubles worsened in 2019 due to a combination of factors such as lower demand for travel to Japan and a weak won against the dollar,’’ Bose said. “The loss-making airline has been in (the) midst of financial problems in recent years due to trade war between South Korea and Japan resulting in (a) decline in demand for trips between both the countries. “As a result, for the first nine months of this year, the company posted a net loss of over KRW500bn.” Bose said the deal was part of HDC’s plan to diversify its business portfolio. “The deal will help Hyundai benefit from the synergies as it has been expanding into (the)  hotel business and news is also doing the rounds of its likelihood of foraying into inflight duty-free sales,’’ he said “At the same time, HDC intends to help lower Asiana's debt-to-equity ratio, improve profitability by streamlining routes and enhancing cost-effectiveness.”