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| A worker moves an empty meal cart at an in-flight meal production facility operated by Korean Air in Incheon, April 2. / Korea Times photo by Shim Hyun-chul |
By Jun Ji-hye
Korean Air and other local airlines are struggling to come up with additional rescue measures that will ensure their survival in the airline industry crisis amid ongoing restrictions on overseas travel due to the COVID-19 pandemic, industry officials said Wednesday.
The country's flag carrier has decided to sell its in-flight catering and duty free units to Hahn & Company, a local private equity fund (PEF), as part of efforts to overcome its liquidity crisis.
After a board of directors meeting, Tuesday, the airline said it had decided to give the company the exclusive rights to negotiate for the sales of the two units.
"Korean Air will continue to consult with Hahn & Company regarding follow-up steps, such as due diligence," a Korean Air official said.
Industry officials estimate the sale price of Korean Air's in-flight catering unit at about 1 trillion won ($836 million).
Following the announcement, the Korean Air union issued a statement, calling on the company to immediately stop its attempt to sell off the in-flight catering and duty free businesses as "such a plan is causing job instability among employees."
Regarding the union backlash, the company said it will try its hardest to guarantee job security for employees of the two units, and will continue to communicate with the union.
The sales plan comes as the nation's top air carrier has faced a setback in its attempt to sell its vacant property in Songhyeon-dong, central Seoul, for about 500 billion won due to the Seoul Metropolitan Government's plan to build a park there.
The company said it is working to sell off the property as planned.
In April, Korean Air also received 1.2 trillion won in loans from the Korea Development Bank (KDB) and the Export-Import Bank of Korea (Eximbank).
Other airlines including Asiana Airlines have been grappling with difficulties as well amid the growing impact of the coronavirus on the industry.
Asiana Airlines has been expanding its operation of chartered flights and cargo services in a desperate attempt to cover the losses caused by the fall in passenger flights.
In April, the nation's second-biggest carrier also advised all of its employees to take at least 15 days of unpaid leave each month until business returns to normal.
Budget carriers have been expanding their irregular domestic flights to Jeju, Busan, Yeosu and Yangyang, seeking a breakthrough.
