Korean Air to issue $817 million in new shares as virus strains industry

FILE PHOTO: Korean Air's passenger planes are parked on the tarmac as overseas flight routes are reduced following the outbreak of coronavirus disease (COVID-19), at Incheon International Airport in Incheon, South Korea.

South Korea’s largest airline, Korean Air (003490.KS), said on Wednesday its board decided to sell about 1 trillion won ($816.55 million) in new shares to raise funds amid mounting strains in the industry due to the coronavirus pandemic.

About 79 million newly issued shares, to be listed on July 29, will be first bought by the carrier’s shareholders, including holding company Hanjin Kal (180640.KS) which has a 30% stake in the carrier, followed by general public, the company said in a statement.

Last month, South Korean state-owned banks announced they would provide 1.2 trillion won in liquidity to support Korean Air.

Korean Air had 70% or more of its employees working in South Korea take a six-month leave of absence in April. Woo Kee-hong, the airline’s president, warned in March that the coronavirus outbreak could threaten its survival if the situation becomes prolonged.

Travel restrictions imposed by government have crippled demand and led to airlines grounding their fleets worldwide. A spokeswoman for Korean Air said it was operating just 10% of its previously planned international schedule, and 60% of its domestic schedule.

The airline said it expects its June international schedule to rise to 20% of its previous plan, as it announced the addition of more international passenger flights to prepare for increased travel demand once COVID-19 restrictions are relaxed.

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