FILE PHOTO: Korean Air’s passenger planes are parked on the tarmac as overseas flight routes are reduced following the outbreak of coronavirus disease (COVID-19), at Incheon International Airport in Incheon, South Korea, March 24, 2020. REUTERS/Heo Ran/File Photo
SEOUL (Reuters) – Two state-owned banks in South Korea said on Friday they would provide up to 1.2 trillion won ($971 million) in liquidity to support Korean Air Lines Co Ltd (003490.KS) as the aviation industry reels from the coronavirus crisis.
Korean Air said it would do its best to overcome the crisis, including “stopping the wasteful competition for equity interests” in holding company Hanjin Kal (180640.KS) that was recently locked in a proxy battle, as well as efforts such as asset sales and restructuring its operation around competitive core businesses.
Korea Development Bank (KDB) and Export-Import Bank of Korea will provide the liquidity in the form of about 200 billion won in loans, 700 billion won by acquiring asset-backed securities, and 300 billion won in bonds without a maturity date, a KDB official said.
This month, Korean Air said 70% or more of its employees working in South Korea would take a leave of absence for six months as part of efforts to overcome operational difficulties resulting from the coronavirus pandemic.
The banks’ support follows their decision to provide up to 1.7 trillion won in fresh liquidity to the country’s second-largest carrier, Asiana Airlines, (020560.KS) this week.
The transport ministry, financial regulator and state-run Korea Development Bank announced in February that they would extend up to 300 billion won ($251.55 million) of liquidity to domestic budget carriers because of the crisis.
Reporting by Heekyong Yang and Joyce Lee; editing by Philippa Fletcher