Korean Air's (KAL) parent company, Hanjin KAL, announced today it would acquire South Korea's second largest airline group, Asiana Airlines, in a 1.8 trillion won (US$1.6 billion) transaction. Read More » "The deal between the top two airlines of Korea will provide great momentum to restructure the Korean aviation market amid the unprecedented crisis faced by the global aviation industry due to COVID-19," the company said in a statement. Korean Air planned to raise 2.5 trillion won in fresh capital through the issuing of new shares early in 2021 to fund the deal.
Today's statement said that as part of an agreement with the Korea Development Bank (KDB), Hanjin KAL would receive an 800 billion won investment from the KDB. This comprised Hanjin KAL selling 500 billion won of new shares to the bank and 300 billion won of exchangeable bonds to acquire KAL’s new shares to be issued in 2021. "Hanjin KAL will lend this KRW 800 billion to Korean Air immediately after receiving it from the bank, in order to support both airlines before Korean Air’s capital increase," the statement said. "Of the KRW 800 billion from Hanjin KAL, Korean Air will invest KRW 300 billion to acquire perpetual convertible bonds from Asiana Airlines and use an additional KRW 300 billion as a down payment for the KRW 1.5 trillion contract to acquire Asiana Airlines’ new shares.” This initial investment would "enable Asiana Airlines to secure the funding needed for operations until the end of the year, as well as improve its financial position".
KAL said the main reason behind the decision to acquire Asiana Airlines was to "stabilize the Korean aviation industry" when COVID-19 has battered the sector. "Considering Korean Air’s financial status could be endangered if the COVID-19 situation is prolonged, it is inevitable to restructure the domestic aviation market to enhance its competitiveness and minimise the injection of public funds," KAL said. "Given the crisis the airline industry is facing, it is unavoidable to restructure the entire market, including Korean Air, Asiana Airlines, the low-cost carriers such as Jin Air and relevant industries."
Markets reacted positively to the acquisition. KAL shares were up 13%, at 26,950 won, on the Korea Exchange in afternoon trade on a day the broad market Korea Composite Stock Price Index (KOSPI) was about 2% higher. Asiana Airlines, which had a previous takeover attempt collapse in September, rose 30%,to 5,570 won.
Philippine Airlines (PAL) has reported a net loss of 7.8 billion pesos (US$162 million) for the three months to September 30, a deterioration from a net loss of 5 billion pesos a year ago. Revenue fell 77% to 8.4 billion pesos, PAL said in a regulatory filing to the Philippine Stock Exchange on Friday. "The group’s performance was severely impacted by the country’s economy due to COVID-19,” PAL said.
PAL’s financial report said the airline group had revised its aircraft delivery schedule in April "to align with the forecast recovery of travel demand", Aircraft due to arrive at PAL in 2020-2021 have been pushed back to 2022-2025. At September 30, PAL has 98 aircraft, with 13 owned and 75 under lease. Figures from the Airbus website showed PAL had outstanding orders for 13 A321neo narrow-bodies. The Boeing website listed no outstanding orders.
China Southern Airlines' (CSA) latest traffic report showed the Guangzhou-based carrier achieved month-on-month and year-on-year domestic passenger growth for a second straight month in October. CSA said it carried 11.8 million domestic passengers in October, up 6.3% from 11.1 million in September and 3.3% above the 11.4 million transported in October 2019. The traffic report, published late last week, said domestic capacity rose 11.6% year-on-year in October and was 8% higher compared with September. Domestic load factor was 77.3% in October, 1.2 percentage points lower than September and 6.8 percentage points below a year earlier.
The Association of Asia Pacific Airlines (AAPA) said today it had signed a joint declaration with the International Air Transport Association (IATA) and Airports Council International (ACI) Asia-Pacific calling for greater collaboration with governments to safely re-open borders. It also expressed continuing firm support for the International Civil Aviation Organisation (ICAO) Council Aviation Recovery Task Force (CART) guidance. CART outlines the aviation industry’s risk mitigation measures for safeguarding the safety and well-being of air travellers. "Asia-Pacific airlines are firmly committed to working with governments and other stakeholders to rebuild passenger confidence and pave the way for the meaningful recovery of travel and tourism as essential services supporting commerce and livelihoods within the region and across the world," AAPA director general, Subhas Menon, said in a statement at the conclusion of the 2020 Assembly.
VietJet Air and UPS have signed an agreement to expand their respective cargo networks. Under the deal, announced late last week, VietJet can access the UPS international freighter network and UPS can partner with VietJet's intra-Asia network. "Cooperation with UPS paves the way for VietJet to make Hanoi, Ho Chi Minh City and Bangkok regional logistics hubs for one-stop cargo transportation services from Asia to western destinations as we expand our domestic flight network in the countries and boost international services, not just within Southeast Asia, but in Northeast Asia," VietJet Cargo CEO, Do Xuan Quang, said.
There were 62,120 international passengers flying into and out of Australia in September, down 98.2% from 3.5 million in the same month a year earlier. Travel restrictions introduced to contain COVID-19 continue to hit Australasia hard, the Bureau of Infrastructure, Transport and Regional Economics revealed in figures published at the end of last week. The numbers were 14% below the 71,998 international passengers processed in August. Available seats in September were 92.4% below 12 months ago. In September, Qatar Airways had the largest share of international passengers flying into and out of Australia at 17.3%, ahead of Air New Zealand (11.6%) and Emirates Airline (11%).
Qantas today celebrated the centenary of its foundation on November 16, 1920 as Queensland and Northern Territory Aerial Services. Celebrations to mark the occasion have been scaled back due to COVID-19 but the airline group operated a 100-minute evening flight for 100 Qantas staff and frequent flyers to mark the occasion. “Around the world, Qantas is probably best known for its safety record, endurance flying and long list of aviation firsts," Qantas Group CEO, Alan Joyce, said in a statement. "For Australians, there’s nothing quite like seeing the flying kangaroo at the airport, waiting to take you home. We hope to be doing a lot more of that in the months and years ahead," he said.
