In Need of Maximum Government Assistance
Korean Air is to be supplied with a liquidity of 2.2 trillion won, which is divided into financial assistance from the government and a paid-in capital increase of one trillion won. Despite the quick fix, the airline still needs additional 1.6 trillion won to overcome this year’s liquidity crisis.
In this regard, the airline is planning to sell assets such as its land in Seoul, Paradise Hotel in Jeju and Wangsan Marina in Incheon. However, concerns are mounting over whether the values of the assets will be adequately assessed with the COVID-19 pandemic increasingly affecting the economy.
After the disposal of the assets, the liquidity shortage needs to be addressed by means of the key industry stabilization fund of the government. This comes with the precondition that Korean Air maintains at least 90 percent of its employment. At present, every executive of the company is returning 50 percent or less of his or her monthly salary and 70 percent of its employees are having a six-month leave of absence.
“The aviation demand is unlikely to rebound in the near future, and we need a large amount of money for the second half of this year,” Korean Air explained, adding, “Although nothing has been determined yet, the maximum government assistance possible is what we need now.”