Asiana Airlines grapples with mounting debt amid delayed acquisition by Korean Air

Asiana Airlines is struggling with worsening finances, as the planned acquisition by Korean Air has hit a snag following an unexpected disruption in the cash-strapped airline’s recent board meeting. Given Asiana’s rising debt ratio, the firm’s financial structure is forecast to deteriorate further at a rapid pace if the acquisition plan continues to be protracted, according to data and experts, Wednesday. According to the Financial Supervisory Service (FSS), the debt ratio of Asiana came in at 1,386.7% as of 2019. But the figure soared to 2,097.5% at the end of June this year. The ratio refers to the portion of a debt against a firm’s total assets. The airline reported a net loss of 60b won ($44.19m) in the first half of this year mostly due to the mounting interest burden from its debt worth around 12t won. Industry insiders, therefore, argue that the company needs to merge with Korean Air at the earliest possible stage, so both airlines minimize spending on interest. In addition, Korean Air is on track to give up lucrative revenue streams that could be generated from the takeover of Asiana, in a bid to persuade overseas authorities concerned about possible monopoly issues after the acquisition of Asiana. In a remedied plan, Korean Air announced in a recent note to investors, that it plans to unload Asiana’s cargo business and support a potential remedy for four air routes from Korea to Europe. Experts said Asiana’s board has no choice but to accept the proposal by Korean Air despite the potential side effects.<br/>