10 Tril. Won Fund Promoted for Aviation Industry Restructuring
Korean Air’s borrowings subject to redemption or refunding within this year add up to 4,806 billion won. As of the end of last year, the airline’s corporate bonds, asset-backed securities and bank borrowings totaled 16,962 billion won.
The money that must be paid back this year includes perpetual bonds worth a total of 590 billion won. Although the perpetual bonds have maturity of 30 years or more, those are generally regarded as high-interest bonds with maturity of two to three years due to a step-up clause.
In the case of Asiana Airlines, the borrowings that must be paid back within this year amount to more than two trillion won. Although HDC Hyundai Development Co. is scheduled to take over the airline, whether the acquisition will actually take place is still up in the air. It is already said that Asiana’s excessive borrowings will be a winner’s curse for HDC. Korea Development Bank will have to bear the burden if the takeover fails.
In the meantime, industry insiders are saying that the Ministry of Land, Infrastructure and Transport and the Ministry of Economy and Finance will form a task force to discuss an aviation industry restructuring fund of 10 trillion won.