Addendum
Focus on Walter Cho after death of disgraced Korean Air patriarch
April 1st 2019
At press time, Korean Air (KAL) announced its chairman and CEO, Cho Yang-ho, 70, had died peacefully in a Los Angeles hospital on April 7. Read More » No cause of death was announced but a company official told Reuters Cho has suffered from a lung condition. His passing came just shy of three weeks after he was voted off the board of the airline group by disgruntled shareholders.
At the airline group’s AGM, activist investors from a government pension fund led the shareholder charge to oust Cho following allegations he favored family members in the group’s business dealings and had embezzled MRO and duty free revenue meant for the carrier.
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Cho was the first controlling shareholder of a Korean chaebol to be forced off a board. He continued as KAL chairman and CEO after his sacking as these positions are non-board roles.
Patriarch Cho had succeeded his father at KAL in 1999. He built Korean Air into one of Asia’s largest airlines and was a founding member of the SkyTeam airline alliance. He controlled 30% of Korean Air through parent company, Hanjin Group, of which he was also chairman.
However, his achievements have been clouded by allegations of tax evasion that extend back for decades, corruption cases that charge Cho with stealing at least US$17 million from the company and public outrage at the entitled behavior of his daughters, “nut rage” heiress, Cho Hyun-ah, and tantrum- prone sister, Cho Hyun-min.
At this early stage, it is expected Cho’s son, Korean Air president and COO, Walter, 43, will succeed his father at KAL, but not before he overcomes several regulatory hurdles including a large tax bill, in the path to the top job.
In an Orient Aviation cover story in November last year, the younger Cho made it clear he knew he must lead change at KAL. “I believe our brand and reputation starts with our employees. I am trying to communicate more with them. Making sure they are happy working for us and with us and making sure the product is there. I think happy employees generate more happy customers.”
Rival Korean carrier, Asiana Airlines also faces uncertain times following the resignation of co-CEO, Park Sam-koo, who also has resigned as chairman of parent, the Kumho Asiana Group and as co-CEO of shareholder, Kumho Industrial. Asiana restructuring must finally deliver page 13.
Co-Asiana CEO, Han Chang-su, is now sole CEO of the airline. After the announcement of Park’s departure, Asiana shares spiked by 15.1%, before settling back to a 2.9% rise. Kumho Asiana said Park met the chairman of the group’s main creditor, Korea Development Bank (KDB), on March 27 and asked for help to normalize Asiana Airlines.
The Asiana parent said it would launch an executive search for a Park successor and establish “an emergency management committee headed by the vice chairman of the group to normalize our management in a short period of time and hire a respectable person outside the company as the new chairman”. The departed Park is the biggest shareholder, at 31.1%, in Kumho & Company, the holding company of Kumho Asiana Group.
