A US$2 billion-plus deal for a South Korean property developer to take over lossmaking Asiana Airlines collapsed Friday in the wake of the coronavirus pandemic, with state-owned banks mounting a bailout to try to save 9,000 jobs.
The global travel restrictions imposed to try to control the virus have wreaked havoc on the airline industry, but Asiana was in trouble even before it struck.
In December, a consortium led by HDC Hyundai Development agreed to buy a controlling stake in the airline from its biggest shareholder Kumho Industrial and pump in fresh cash in a deal totaling 2.5 trillion won ($2.1 billion).
But Asiana reported operating losses of 268 billion won in the first six months of this year – with its debts soaring to 11.5 trillion won.
It has canceled most of its international flights and since April has put all its 9,000 employees on unpaid leave for 15 days a month as it tries desperately to stay airborne.
HDC repeatedly sought to carry out further rounds of due diligence on the airline, in what was widely seen as an attempt to force a price cut.
“Kumho Industrial has notified HDC of the deal termination,” Choi Dae-hyun, vice-president of Asiana’s main creditor Korea Development Bank (KDB), announced Friday.
KDB and another state-owned lender, Export-Import Bank of Korea, will inject another 2.4 trillion won into the carrier to help keep it flying, he said.
They are expected to become its biggest shareholders and seek to restructure the airline before attempts are made to find a new buyer.
Asiana has already received state cash injections totalling 3.3 trillion won since the beginning of last year.