Korean Air's financial soundness to clear runway for Asiana merger

Korean Air’s cash assets and low debt ratio will pave the way for its successful merger with Asiana Airlines despite lingering concerns about the latter’s weak financial structure, market watchers said Monday. The nation’s flag carrier completed its remaining legal procedures last week to take over the cash-strapped Asiana. However, concerns have surfaced that Korean Air would bear a massive financial burden in the process of the complete merger with Asiana. Industry officials and market experts cleared away such views, saying Korean Air’s financial health remains solid enough to endure the financial burden from Asiana. “While the acquisition between the two carriers may lead to a temporary drop in financial stability indicators due to the payment of the acquisition balance and the inclusion of Asiana’s weak financial structure, Korean Air is widely expected to manage the burden,” an official from the aviation industry said. Asiana’s debt-to-equity ratio was over 1,400% in 2022 and 2023, and the airline is projected to report net losses this year. The airline reported a net loss of 66.1b won ($46m) for the first three quarters combined this year. Its operating profit margin reaches merely 4.1%, which leaves the airline in the red. This is not the case for Korean Air, as the carrier reported its record operating profit of 2.88t won in 2022. The company went on to generate stable earnings reports the following year with an operating profit of 1.58t won.<br/>