Korean Air’s takeover of Asiana on track after court decision

South Korea’s bid to restructure its airline industry was given the green light after a court cleared a crucial step in Korean Air Lines’s plan to buy smaller rival Asiana. The Seoul Central District Court on Tuesday rejected a request to halt a sale of new shares by Korean Air’s parent to state-run Korea Development Bank, a stock issue designed to enable the takeover. The ruling clears the path for the biggest reorganization in South Korea’s airline industry. Airlines have been making record losses this year as travel was all but wiped out after governments closed borders to contain the spread of the coronavirus. Carriers are cutting jobs, selling non-core assets and reducing their networks, with the IATA predicting that travel won’t recover to pre-Covid levels until 2024. Korea Development Bank, the main creditor of struggling airline Asiana, said last month that the planned combination of Korean Air and Asiana could collapse if the court rules against the share sale. An unfavorable ruling would have meant that creditors would have to take over Asiana and inject more capital to prevent it from a collapse. The case against the share sale was filed by an alliance of three big holders of Korean Air parent Hanjin Kal Corp., who argued that the stock placement would dilute their stakes and boost Chairman Walter Cho’s sway over the holding company. The alliance, which includes Cho’s sister, is at odds with the chairman and failed with an attempt to oust him this year. “The decision for the new share sale was made on the purpose of acquiring and merging Asiana,” the court said in its ruling. “The court also doesn’t believe Korea Development Bank buying shares in Hanjin Kal will change the shareholding structure as the alliance suggests.”<br/>