Management Improvement Demands Submitted to T'way Air by Sono International
Requests for Shareholder Register Inspection and Shareholder Proposals Delivered
Possibility of Securing Management Rights of Air Premia Also Pursued
Aiming for Synergy Between Aviation and Resort Businesses
Accelerating Corporate Restructuring Including IPO Plans
Seo Jun-hyuk, chairman of Sono International and the second-generation leader of Daemyung Sono Group, has officially launched his long-cherished entry into the aviation industry. By securing management rights of low-cost carriers (LCC) T'way Air and Air Premia, he plans to create synergy with the group's core resort business. Just two years after becoming chairman of the group, he is accelerating efforts to expand business operations beyond Korea into overseas markets and restructure the group.
On the 22nd, Daemyung Sono Group announced that its holding company, Sono International, will actively participate in management by demanding improvements from T'way Air, requesting inspection and copying of shareholder registers, and submitting shareholder proposals. Earlier, on the 20th, a management improvement request was delivered to T'way Air and CEO Jung Hong-geun, demanding ▲a complete replacement of the management team and ▲a capital increase for the stable operation of T'way Air. Additionally, on the 21st, Sono International requested inspection and copying of the shareholder register and submitted shareholder proposals to be included in the agenda of the regular shareholders' meeting scheduled for March.
Targeting Management Rights of T'way Air and Air Premia... Considering Merger of Both Airlines
Through shareholder proposals, Sono International has requested the agenda for the appointment of new directors and plans to form a new board to establish stable airline management strategies, maximize synergy between the aviation and hospitality industries, and improve financial structure. Sono International stated, "We prioritize the growth of T'way Air and enhancement of shareholder value, and these proactive measures are aimed at maximizing these goals." They added, "By strengthening financial soundness and corporate competitiveness, we aim to establish a foundation for long-term growth through this management improvement request and shareholder proposals."
Previously, in July last year, Daemyung Sono Group acquired a 26.77% stake in T'way Air for approximately 176 billion KRW. The holding company Sono International purchased a 14.9% stake from private equity firm JKL Partners for 105.6 billion KRW, and in August, its affiliate Daemyung Sono Season exercised a call option to acquire the remaining 11.87% stake for 70.8 billion KRW.
Currently, the largest shareholder of T'way Air is T'way Holdings with 28.05%, and Yerimdang holds 1.72%. Including shares held by related parties, their combined stake is 30.08%. Daemyung Sono Group is the second-largest shareholder, with Sono International holding 16.77% and its affiliate Daemyung Sono Season holding 10%. The gap between the first and second largest shareholders is about 3 percentage points.
Sono International has also opened the possibility of acquiring management rights of another low-cost carrier, Air Premia. In November last year, it acquired 11% of Air Premia's shares from JC Partners, the second-largest shareholder holding 22%, for 58.1 billion KRW, effectively becoming the second-largest shareholder. Sono International also secured a call option to purchase the remaining 11% stake after June. Currently, Air Premia's shareholding structure consists of AP Holdings' friendly shares at 46%, Sono International at 11%, JC Partners' friendly shares at 11%, and other shareholders at 32%. Sono International stated, "We will faithfully fulfill the shareholder agreement with AP Holdings," and added, "If we secure management rights of both T'way Air and Air Premia, we are considering merging the two airlines."
Setting the Stage for Overseas Market Synergy through Aviation
Chairman Seo formalized his intention to participate in T'way Air's management, stating, "By leveraging Daemyung Sono Group's abundant domestic and international infrastructure to launch various products and enhance customer service, we will maximize customer satisfaction for T'way Air and contribute to increasing shareholder value." He expressed his ambition, saying, "We will make this entry into the aviation industry a new growth engine for Daemyung Sono Group and leap forward as a global leading company."
This is not Seo's first enthusiasm for entering the aviation industry. Back in 2011, while serving as CEO of Daemyung Enterprise (now Daemyung Sono Season), he attempted to acquire T'way Air when it was up for sale, but negotiations broke down due to disagreements over the price.
Industry insiders view Daemyung Sono Group's interest in the aviation sector as a strategic move to strengthen its position in the travel and leisure industry. A travel industry official noted, "Securing airline seats is crucial not only for outbound travel by Koreans but also for attracting foreign tourists to Korea. Therefore, the authority and influence of airlines are absolute." They added, "If Sono International, which operates hotels and resorts domestically and internationally, gains management rights of an airline, it can attract overseas tourists through various routes and expand outbound products (overseas travel by Koreans) linked to the company's global resorts, creating synergy."
Sono International currently owns 18 hotels and resorts in Korea, operating over 11,000 rooms. Chairman Seo is the son of the late Seo Hong-song, founder of Daemyung Housing, the origin of Daemyung Sono Group, and completed the succession by becoming chairman of Sono International in February 2023. As of the end of 2023, special related parties including Seo's mother, Park Chun-hee, chairwoman of Daemyung Sono Group, hold 64.07% of Sono International's shares.
Seo, who majored in economics at the University of Minnesota, has led changes targeting global markets since joining company management. Notably, he changed the accommodation brand name from the familiar Daemyung Resort to "Sono," meaning utopia in Italian, and introduced the mattress brand "Sono Season" based on Sono Hotel & Resort's business know-how. Since 2007, he has also operated Sono Pet Club & Resort, a complex cultural space for pet owners. He is actively pioneering new overseas businesses. Starting with the entrusted operation of Song Gia Resort in Vietnam in 2019, Sono International has successively acquired and operated Normandy Hotel in Washington DC, 33 Seaport Hotel New York, Dame des Arts Hotel in Paris, France, and Waikiki Resort Hotel in Hawaii.
During the height of the COVID-19 pandemic in 2022, Sono International achieved its highest-ever performance with sales of 926.1 billion KRW and operating profit of 157.5 billion KRW, followed by sales of 847 billion KRW and operating profit of 97.4 billion KRW the next year. Leveraging this expansion, the company is likely to pursue an initial public offering (IPO) again. At the end of last year, Sono International selected Mirae Asset Securities and Daishin Securities as joint lead managers and began full-scale preparations for listing, aiming for an IPO as early as the second half of this year. Previously, Daemyung Sono Group had planned an IPO for its holding company Daemyung Sono in 2019 but postponed it due to the worsening business environment caused by COVID-19.
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