Asiana should submit self-rescue plan: Choi

Asiana Airlines should submit a credible self-rescue plan to its creditor banks if it wants a rollover on its debts, the head of the financial regulator said Wednesday.

The flag carrier has been under pressure to strengthen its financial health amid corporate challenges facing its parent Kumho Asiana Group. Last week, Kumho Asiana Chairman Park Sam-koo stepped down as chief executive of Asiana after the company widened its losses by amending its financial reports.

Analysts warned that a lack of reliability in Asiana’s financial reports may restrict its access to capital markets and lead to a liquidity crunch.

Choi Jong-ku, chairman of the Financial Services Commission (FSC), told reporters that the main reason for Asiana’s trouble is its governance.

Previously, Park resigned from key management posts at the group’s affiliates in 2009 over debt woes but later returned to the posts.

“There is a view that the fundamental reason behind Asiana’s problem is its governance,” Choi said.

Choi called for Asiana’s biggest shareholder, Kumho Asiana Group, to submit a self-rescue plan that could win credibility from the market.

Last year, the state-run Korea Development Bank and Asiana signed a deal that required the carrier to secure liquidity through sales of noncore assets and issuance of convertible and perpetual bonds.

Asiana owes 3.2 trillion won ($2.8 billion) to financial institutions, and it has to repay 1 trillion won of the total this year, according to the company.

Asiana swung to a net loss of 10.4 billion won last year from the previous year’s 248 billion won net profit due to currency-related losses and increased jet fuel costs.

Yonhap