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The Korean Development Bank’s parent company, Hanjin Kal, invested 800 billion won.
Participated in 2.5 billion won paid-in capital increase to Korean Air by Hanjin Kal
Korean Air’s largest shareholder to invest 1.8 trillion won in Asiana Airlines
No artificial restructuring of the workforce other than natural reduction
On the 16th, the Korean Development Bank announced that it had decided to invest 800 billion won in promoting Korean Air’s acquisition of Asiana Airlines. This is a method in which the Korean Development Bank invests 500 billion won in a paid capital increase assigned to a third party to Hanjin Kal, the parent company of Korean Air, and purchases redeemable bonds (EBs) worth 300 billion won.
Hanjin Kal will participate in Korean Air’s paid-in capital increase (2.5 trillion won) for the acquisition of Asiana Airlines. Korean Air will become the largest shareholder in Asiana Airlines by investing a total of 1.8 trillion won, including 1.5 billion won in new stocks and 300 billion won in permanent bonds.
On this day, the government held a meeting of ministers concerned with strengthening industrial competitiveness and discussed ways to normalize Asiana Airlines. After the meeting, the Korea Development Bank announced the details, saying it is promoting the integration of Korean Air, the number one airline in Korea, and Asiana Airlines, the No.
In an online briefing, Lee Dong-geol, President of the Korea Development Bank, said: “This consolidation has a positive effect on the national economy, as it helps to ensure the international competitiveness of the domestic aviation industry in the post-crown era through rapid job security and early normalization of the domestic aviation industry. ” I’m also looking forward to it, “he said.
“The Korean Development Bank and the Hanjin Group are deeply aware of the importance in terms of national economy and national benefit and security that a single national airline will have.” “The Hanjin Group is responsible through various institutional mechanisms such as the Management Evaluation Committee and the Ethical Management Committee. Management and the Korean Development Bank will faithfully fulfill the role of monitoring good management, “he stressed.
President Lee also said, “The Korean Development Bank and the Hanjin Group collect and fully reflect the views of each stakeholder on the expected problems and demands in various aspects, such as the integration process and post-integration employment stability. , consumer benefits, and the adjustment and reorganization of affiliate functions. We plan to do so, so we ask for your continued interest and cooperation. “
If the ‘Big Deal’, which Korean Air acquires Asiana Airlines, becomes a reality, it is expected to jump to the list of the 10 largest domestic airlines in the world. According to IATA (International Air Transport Association), Korean Air was ranked 19th in terms of performance in passenger and cargo transportation last year, and Asiana was ranked 29th.
President Lee explained that Korean Air’s acquisition of Asiana Airlines was due to the judgment that it could effectively reorganize the aviation industry in a situation where the outlook for the aviation industry is uncertain due to the new coronavirus infection. (Crown 19).
He said: “The integrated national airline to be created through this transaction will be able to efficiently respond to the crown crisis and become a world-class airline in preparation for the post-pandemic (global pandemic) by having a position and competitiveness among the top 10 in the global aviation industry. We have secured the basis for this, “he said.
“Low-cost airlines (LCC) will also become competitive through staged reorganizations.” Not only can the scale of inputs be minimized, but it is also expected to contribute significantly to the recovery of funds from input policy. “
Last year, Korean Air’s sales amounted to 12,683.4 billion won, and Asiana Airlines was 6,965.8 billion won. Currently, Korean Air has 173 units and Asiana has 86 units. The combined team (259 units) will surpass its competitor Air France (225 units).
Regarding Korean Air’s acquisition of Asiana Airlines, the vice president of the Korean Development Bank said: “We will strengthen ethical management with this agreement.” I decided not to do it. “He emphasized,” The ethical management committee evaluates every year. If the evaluation score is low, measures will be taken such as replacement or removal of management. There will be no unilateral exercise of voting rights (to the management current)”.
Vice President Choi said he would cooperate with the tripartite alliance, Hanjin Kal’s largest shareholder. The trilateral alliance consists of Cho Hyun-ah, former vice president of Korean Air, KCGI (Subsidiary Force Fund) and Peninsula Construction. There are also observations that the tripartite coalition, which is in dispute with Hanjin Group chairman Cho Won-tae, could block the KDB’s entry of Hanjin Kal funds through a temporary disposition lawsuit.
“There will be no obstacles to integration work,” Choi said. “Taking into account the stability of the national competition and the convenience of the people, we hope to cooperate with the tripartite alliance as the value for shareholders increases. If necessary, we will discuss it as shareholders.”
The monopoly controversy is also a problem to be solved. When Hanjin Group acquires Asiana Airlines, an airline with a domestic market share of more than 60% will be created. As this is a government-led merger, it appears that there will be no difficulties in the FTC’s consolidation review.
Regarding the point that there is a risk of reducing consumer convenience due to monopoly, Deputy Chief Choi said: “We judged that the possibility of a rate increase or a decrease in service convenience was low” and “Rather , routes are expected to diversify and consumer benefits such as mileage integration are expected to increase. ” did. He said: “It is proof that the market share is not absolute even after the integration of the two companies due to the fierce competition with low cost airlines (LCC). The mileage will be integrated after reviewing the value in use. “.
The unions of the two companies have asked the government for guidelines on maintaining employment for the two airlines. Six unions, including the Korean Air Pilots Union (KAPU), the Korean Air Workers Union, the Korean Air Employees Solidarity Branch, the Asiana Airlines Pilots Union (APU), the Open Pilots Union of Asiana Airlines and the Asiana Airlines Workers’ Unions, have held an emergency meeting at the office of the Aviation Pilots Association to discuss the countermeasures related to the acquisition.
When asked if there is a restructuring of the workforce, Vice President Choi answered “the hardest part.” He added: “There will be no artificial restructuring given the labor force by annual natural reductions, integrated work and new projects. In this regard, we have received a confirmation from Hanjin. We will try to avoid job insecurity in the process.”
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