S. Korea's Hanjin said to be in talks to buy Asiana Airlines

SEOUL • South Korea's Hanjin Group, owner of the nation's largest carrier Korean Air Lines, is in talks to acquire debt-ridden Asiana Airlines, the local media reported on Thursday, citing unnamed investment banking sources.

The Korea Economic Daily said Hanjin Group has been in talks with Asiana Airlines' lead creditor Korea Development Bank (KDB), and will be submitting a letter of intent to the bank as early as next week.

Hanjin Group told Reuters nothing has been decided, while Asiana Airlines said it was not aware of such talks.

KDB said in an e-mail statement that talks with Hanjin Group were among the options under consideration, but the bank also said nothing had been decided.

Shares of Asiana Airlines jumped as much as 25.6 per cent to hit a near seven-month high while Korean Air rose as much as 6.5 per cent in morning trade yesterday.

Shares of Hanjin Kal, the holding company of Hanjin Group, were down 8.25 per cent versus a 0.74 per cent rise in the broader Kospi index yesterday.

"The sale itself is good news for Asiana Airlines... Korean Air will likely benefit from the country's No. 2 full-service carrier dropping out of competition, while the integration may bring positive outcomes for South Korea's aviation industry," said KTB Investment & Securities analyst Lee Han-joon.

A planned sale of Asiana Airlines, South Korea's second-largest carrier, collapsed in September.

Hyundai Development and brokerage Mirae Asset Daewoo had agreed last December to purchase control of Asiana Airlines for about 2.5 trillion won (S$3 billion), but they called for better terms after the airline's debt surged when the coronavirus pandemic hit travel demand.

REUTERS