[Asia Economy Reporter Dongwoo Lee] Korean Air is the first domestic airline to pursue the issuance of ESG (Environmental, Social, and Governance) bonds.
According to the aviation industry on the 23rd, Korean Air plans to conduct a demand forecast (pre-subscription) to issue corporate bonds worth 200 billion KRW by the end of this month.
In April, Korean Air conducted a pre-subscription to issue a total of 200 billion KRW in corporate bonds, attracting over 600 billion KRW in funds, which expanded the issuance size to 350 billion KRW.
The corporate bonds to be issued this time are ESG bonds. ESG bonds are bonds issued for socially responsible investment purposes, including environment, society, and governance. Korean Air plans to use the funds secured through the issuance of ESG bonds to introduce eco-friendly aircraft and other purposes.
Previously, Korean Air announced plans to additionally introduce the next-generation eco-friendly aircraft B787-9, of which 10 units are currently in operation, to reduce carbon emissions. The B787-9, made with 50% carbon composite materials, has 20% higher fuel efficiency per seat and emits 20% less carbon dioxide and nitrogen oxides compared to aircraft of the same class.
The corporate bonds to be issued are ESG bonds, and if the pre-subscription rate is high, the issuance size may be expanded. ESG bonds are bonds that must use the issued funds for eco-friendly projects and creating social value, and are classified into green bonds, social bonds, and sustainability bonds.
However, it is known that Korean Air has not yet determined the specific aircraft models and introduction schedule due to COVID-19.
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