Korean Air Acquires Asiana Airlines, Early Repayment of 1 Trillion Won Debt

Debt Ratio Expected to Decrease from 1847% to the 700% Range
Credit Rating Upgraded from BBB- to BBB0... Rising for the First Time in 7 Years

Asiana Airlines is improving its financial structure by early repaying more than 1 trillion won of borrowings with the acquisition payment made by Korean Air.

On the 13th, Asiana Airlines announced that it would early repay 1.04 trillion won in borrowings to its creditor banks, KDB Industrial Bank and Korea Eximbank. It also decided to repay 60 billion won from the Industrial Stabilization Fund on the 27th. The company is improving its financial structure by repaying a total of 1.1 trillion won in policy funds.

The borrowings being repaid this time include 680 billion won in perpetual convertible bonds held by creditor banks and the Industrial Stabilization Fund, and 420 billion won in operating loans borrowed from creditors. The repayment funds were prepared with 800 billion won from the remaining payment of the paid-in capital increase deposited by Korean Air on the 11th.

Accordingly, the debt ratio is expected to decrease by more than 1000 percentage points. As of the end of the third quarter this year, Asiana Airlines’ consolidated debt ratio was 1847%. After receiving the paid-in capital increase funds and repaying the borrowings, it is expected to decrease to the 700% level.

With the improvement in financial structure, the credit rating also rose. Korea Ratings upgraded Asiana Airlines’ corporate credit rating from BBB- to BBB0. This is the first time in seven years since 2017 that Asiana Airlines has received a BBB0 rating from a credit rating agency.

In relation to the merger of Korean Air and Asiana Airlines, discussions on the sale of Asiana Airlines' cargo business are scheduled at the board meeting on the 2nd. An Asiana Airlines aircraft is taking off at Gimpo Airport in Gangseo-gu, Seoul. Photo by Jinhyung Kang aymsdream@