Asiana Airlines resumes trading

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Asiana Airlines resumes trading

Asiana Airlines resumed trading Tuesday after a two-day suspension that followed a qualified opinion from its auditor, the shares opening down almost 16 percent from the close last Thursday.

Auditor Samil PricewaterhouseCoopers (PwC) revised its opinion from qualified to unqualified while the Korea Exchange on Tuesday lifted the suspension on Asiana and removed the carrier from the list of stocks under “surveillance deletion,” which puts a company on the chopping block for delisting.

In the updated audit report, which was submitted 30 minutes before market opening, Asiana’s consolidated revenue rose 8.9 percent in 2018 to 7.18 trillion won ($6.3 billion), while operating profit fell 88.5 percent to 28.2 billion won. A net loss of 195.9 billion won was reported.

The previous audit report had revenue for last year at 6.79 trillion won, up 9 percent, operating profit at 88.7 billion won, down 68 percent, and a net loss of 105 billion won.

Under the revised audit, total debt was 6.17 trillion won, a 1.8 percent increase from the previous 6.06 trillion won. The company’s debt-to-asset ratio was at 649.3 percent, 83.4 percentage points higher than the previous year.

The auditor noted that mileage and deferred profits were overestimated by 39.1 billion won, while debt on the maintenance of leased aircraft was underestimated by 42.5 billion won and the stock investment impairment loss was underestimated by 22.3 billion won.

The company’s shares fell 15.6 percent compared to Thursday’s close and traded around 3,410 won when the market opened. They were down as much as 17 percent during the day and are now at a five-month low. It closed the day at 3,435 won, down 14.98 percent from Thursday. The fall was triggered by a sell-off by institutional investors.

The shares of Kumho Industrial, the parent of Asiana Airlines, fell 25.91 percent to 3,200 won. Kumho Industrial was also suspended on Friday and resumed trading Tuesday after its own audit opinion was raised from qualified to unqualified.

Asiana’s inclusion in the KRX300 has been brought into question.

The KRX300 is a composite index introduced last year. It has 305 component shares and a market capitalization equal to that of about 85 percent of all Kospi and Kosdaq companies. Membership in the index is adjusted twice a year, in June and December.

With many institutions considering selling the shares, the KRX is currently having internal discussions on whether to keep Asiana Airlines in the KRX300. The company’s debt may also be downgraded.

Korea Investors Service and NICE Investors Service have placed Asiana Airlines on review. The rating could be reduced from BBB- to BB+. That could result in the early redemption of asset-backed securities, which at present total 1.25 trillion won.

Although an immediate liquidity crunch is unlikely, the company could be under pressure until evaluations by the credit-rating companies are released around June.

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