Sibling feud at Korean Air explodes into public view
It was not the happiest festive season for the Cho family, shareholders of the Hanjin Group conglomerate, and its flagship national carrier, Korean Air (KAL). Read More » Once again, the siblings hit the headlines in local media after reports emerged of a family argument on Christmas Day at the home of Lee Myung Hee, the widow of the late KAL chairman, Cho Yang-Ho.
The late Cho’s only son, Walter Cho Won-Tae, and his mother subsequently issued a formal apology for their conduct and said they were “deeply sorry for causing concerns to many people over an unsavory incident on Christmas Day,” reported the Korean news agency Yonhap.
Walter Cho, the 43-year-old chairman of Hanjin Group and KAL president and chief executive, has been running the conglomerate since the death of his father 10 months ago. Apparently Walter’s ascendancy has created a rift between Walter and his sister Cho Hyun-ah, or Heather Cho, the eldest daughter of the late patriarch.
Heather has publicly expressed her dissatisfaction with her brother’s leadership of Hanjin Group, including KAL. Heather, 45, earned global notoriety in December 2014 when she ordered a KAL plane to return to the gate in New York after scolding a flight attendant for the way she was served macadamia nuts in first class. As a result of the incident, she was convicted of usurping a pilot’s authority and spent five months in prison.
In an unprecedented public statement late last year she accused her brother of running the companies without adequately consulting the rest of the family, violating their father’s wishes.
“There have not been sufficient discussions about appointing the head of Hanjin Group. I will listen to various views of shareholders,” she said in an emailed statement issued by her lawyers. “Hanjin Group is being managed in a way that goes against the previous chairman’s wishes,” she added.
Her statement was the first time any member of the founding family had publicly voiced discontent about the management of the chaebol since the elder Cho died in a U.S. hospital last April. In November, the siblings inherited their father’s holding in Hanjin KAL in accordance with the law. Walter Cho owns 6.52% of Hanjin KAL and Heather has 6.49%, it was stated in a November filing. Emily Cho, the youngest sibling in the family, has a 6.47% holding in the group and Cho’s widow 5.31%.
Korean media reported the Christmas Day argument erupted when Walter blamed his mother for encouraging his older sister to question his leadership of Hanjin KAL and KAL.
The family dispute comes at a difficult time for KAL as it struggles to overcome challenging economic conditions, including a trade war between Korea and Japan that has dented traffic. The airline reported a net loss of US$71.8 million in its 2018 year and in August announced a net loss of $362.7 million for the first six months of 2019.