[Special Stock] Asiana Hit Hard by COVID-19, Plunges 10% on 3-for-1 Free Capital Reduction

[Asia Economy Reporter Oh Ju-yeon] On the 4th, Asiana Airlines' stock price started the morning session down more than 15%. This is interpreted as a flood of sell orders following the news that a 3-for-1 free capital reduction will be implemented to improve the financial structure. With this free capital reduction, shareholders holding 3 shares of Asiana Airlines will hold only 1 share.

As of 9:07 a.m. that day, Asiana Airlines' stock price was trading at 3,185 KRW, down 11.65% compared to the previous trading day. Although the decline narrowed compared to the opening price of 3,045 KRW, which had plunged 15.53%, it was still trading at a level down by more than 10%. During the session, it fell to 2,995 KRW, temporarily breaking below the 3,000 KRW level. This is the first time since it plunged on March 19 and recorded prices in the 2,000 KRW range.

Asiana Airlines decided to proceed with a free capital reduction to offset losses caused by performance deterioration due to the novel coronavirus infection (COVID-19) and to improve its financial structure. In particular, it chose an equal reduction rather than a differential reduction, which will also reduce the number of shares held by small shareholders.

Meanwhile, as of the second quarter, Asiana Airlines' capital erosion ratio stands at 56.3%. If the capital erosion ratio exceeds 50% in the year-end business report, the company is designated as a management target.