Asiana trade halted after auditor raises questions

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Asiana trade halted after auditor raises questions

The Korea Exchange halted trading in the shares of Asiana Airlines Friday, with the suspension running through Monday.

The decision followed a qualified opinion on 2018 financials from Samil PwC. The accountancy said that it could not determine the value of the carrier due to the lack of information.

Asiana Airlines filed its report to the regulators one day after the Thursday deadline.

It is unusual for a conglomerate such as Asiana to receive a qualified opinion.

Auditors can issue four types of opinions - unqualified, qualified, adverse and disclaimer.

Samil PwC said in its auditing report that it was not able to confirm: liabilities related to the maintenance of leased aircraft and mileage; deferred profits; recoverable losses related to tangible and intangible asset impairment; the fair value of some related-company shares; and the consolidated financial statements of Air Busan.

Korea’s second-largest carrier had to adjust its March 14 report at the request of the auditors.

As a result of the restatement, the company’s consolidated net loss for fiscal year 2018 went from 94.6 billion won ($83.7 million) to 105 billion won. Its operating profit dropped from 178.4 billion won to 88.7 billion won. Revenue fell from 6.85 trillion won to 6.79 trillion won.

Samil PwC said in its report that the company continues to face uncertainties and cited external factors, including foreign exchange and crude oil price fluctuations. It added that competition in the airline industry is intensifying with the rising capacity of budget carriers.

“The current liabilities exceed current assets by 1.75 trillion won,” the report stated. “While the current financial statement was made on the presumption that it will be able to recover and pay [debts] through the normalization of its business activities, the management performance and the company’s fiscal situation could change dramatically due to external factors that could raise significant questions over the company’s abilities.”

Asiana Airlines said in a statement that, while it accepts the view of the auditor, it only received the qualified opinion because Samil PwC applied strict accounting standards. The disagreement is one of accounting not cash flow or sales abilities.

The company said it will take appropriate actions. This will include requesting a new audit as soon as possible. As a new audit has been requested, the stock market said trading will resume Tuesday.

Since last year, Asiana has been making intense efforts to restructure, including selling off the 738,427 shares of CJ Logistics it owned valued at 90 billion won.

Asiana Airlines on Thursday closed at 13,000 won after falling 14.19 percent from the previous day.

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