[Corutesy of Korean Air]
South Korea's top flag carrier Korean Air became a hot item among stock investors and market watchers Wednesday as its troubled sister firm, Hanjin Shipping, applied for court receivership.
Korean Air rose 1.45 percent to close at 31,550 won (28.2 US dollars), a day after creditors rejected a new self-rescue plan presented by Hanjin Shipping and refused to extend fresh loans to the arm of South Korea's Hanjin Group.
Hanjin Shipping, one of the world's top ten container carriers, promised to do its best for the "rehabilitation" of South Korea's shipping industry but it now faces an inevitable choice of placing itself under third-party management through court receivership.
Korean Air, a key unit of the family-run group controlled by Cho Yang-ho, has seen its financial woes aggravated by a continued injection of liquidity into the shipping unit.
The airliner posted a second-quarter net loss of 251 billion won (225 million US dollars), up from 169 billion in the year-ago quarter. Its second-quarter operating profit stood at 159 billion, a considerable turnaround from an operating loss of three billion a year earlier, due to a solid improvement in revenue and a decline in fuel costs.
Like other tycoons who control their family-run conglomerates through a complex web of cross-shareholdings, the Cho family controls 29.8 percent in Hanjin KAL which has 31.46 percent in Korean Air.
Daishin Securities predicted Korean Air would see a dramatic turnaround in third-quarter corporate earnings if Hanjin Shipping is put under court receivership.
Hana Financial Investment estimated Korean Air's loss related to Hanjin Shipping would reach 376 billion won but said the company could reduce its debt
and boost its corporate value by severing its financial link with the shipping unit. Korea Air's debt ratio stood at 1,082 percent at the end of June.
Aju News Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
