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Korean Air to Offload Non-Essential Assets, Improve Transparency
Korean Air, South Korea’s flag carrier, is selling its non-essential assets in an effort to improve its financial standing and increase transparency, FlightGlobal reports. The most notable asset the airline will sell is real-estate in downtown Seoul, South Korea and a leisure company, which Korean Air wholly owns, that operates a resort in Incheon, South Korea, outside of Seoul.
“Korean Air’s sale of unprofitable assets reflects its goal of strong financial stability,” the airline said. It announced that the Seoul real estate “faced multiple development challenges,” while the resort needs “an additional and long-term investment…to create profitability.”
The carrier has also announced plans to improve corporate transparency, including strengthening its board’s independence. It created a recommendation committee, composed entirely of directors from outside the airline, to help lead its efforts. This committee will review Korean Air’s major business issues and suggest fixes to secure shareholder values and rights.
“Korean Air is determined to maximize shareholder value,” the airline said. “The resolutions that were passed reflect the company’s strong will to improve its financial position and create a sound and transparent governance structure.”
Korean Air reported a net loss of 627 billion won ($530.17 million USD) through three quarters in 2019. It has also been struck with controversy in recent years. In 2018, Jin Air, one of Korean Air’s affiliates, almost lost its air operator’s certificate when it was found that executive vice-president Emily Cho, who had held U.S. citizenship, had served on its board from 2010 to 2016, violating a law that prohibits foreign nationals from serving on the board of a national passenger airline.
Cho Yang-Ho, Korean Air’s former Chief Executive Officer, was voted off the airline’s board last April amid allegations of embezzlement and tax evasion.
Korean Air’s amnesty efforts will help improve the airline’s tarnished image. By giving its Board of Directors more influence, the carrier is limiting the power that any one person holds at the airline, limiting their ability to abuse the carrier’s resources. Removing unprofitable assets from its portfolio will also allow Korean Air to focus more time and resources on its brand, helping it improve passenger experience and return to profitability.
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