Delta denies aiding Cho family control of airlineThe recent purchase by Delta Air Lines of a stake in Hanjin KAL, which owns 29.96 percent of Korean Air Lines, was just an investment, not a ploy, to help maintain family control, according to a local activist fund on Tuesday.
In reply to a letter sent by the Korea Corporate Governance Improvement (KCGI) fund, Delta Air Lines said its purchase of the 4.3-percent stake in Hanjin KAL was part of its investment plan, KCGI said in a statement.
On June 20, Delta announced the stake investment in Hanjin KAL and said it would eventually increase its share in the company to 10 percent.
In a letter sent to Delta on June 28, KCGI called on the U.S. airline to clarify the purpose of its investment in Hanjin KAL.
Delta’s unexpected investment in Hanjin KAL has cleared uncertainties surrounding the battle to defend against attacks by activist hedge funds, such as KCGI.
Delta and Korean Air formed a joint venture last year to collaborate on the industry’s most robust trans-Pacific routes, providing customers access to more than 290 U.S. destinations and over 80 in Asia.
With Delta’s investment, KCGI has been widely expected to face an uphill battle in bringing changes to Hanjin Group, the country’s 13th-biggest chaebol by assets.
KCGI has been demanding a Seoul court designate an auditor to review Hanjin KAL’s appointment process for a new chairman.
Hanjin KAL’s board named Cho Won-tae, late Chairman Cho Yang-ho’s only son, as the new chairman in April following his father’s death.
The Cho family and other relatives together hold a 28.93-percent stake, including 17.84 percent held by the late chairman, in Hanjin KAL. The National Pension Service owns a 7.34-percent stake in the firm.