Korean Air said it is seeking to secure KRW 2.2 trillion (US$1.8 billion) worth of funds from fundraising and government aid to overcome the liquidity crisis caused by COVID-19. 

At its board meeting on May 13, Korean Air said it decided on plans to issue new shares to raise KRW 1 trillion as well as methods to receive government aid. 

The airline will increase paid-in capital by first allocating newly issued shares to shareholders and then opening up remaining shares to the public. A total of 79,365,079 million shares of its stock are planned to be issued at KRW 12,600 each. 

The total number of Korean Air’s issued shares will increase from 95,955,428 to about 175 million shares. The final issue price will be confirmed on July 6, 2020 and the listing of new shares will take place on July 29.

Government aid

Korean Air’s board of directors also decided to receive KRW 1.2 trillion (US$980 million) of government aid in the form of KRW 700 billion (US$571 million) of asset-backed securities based on cargo sale bonds and KRW 300 billion (US$245 million) worth of perpetual bonds with stock conversion rights through the Korea Development Bank and The Export-Import Bank of Korea.

The board also decided to receive an asset-backed loan of KRW 200 billion (US$163 million). 

"Korean Air will continue to carry out self-rescue measures to overcome the dismal business environment due to COVID-19," it said in a statement.

As part of the airline's efforts, its executives have forgone up to 50% of their salaries and 70% of the airline’s employees have gone on leave. 

Also, in an effort to further increase liquidity, Korean Air is in the process of selling non- core assets such as land in the city centre of Seoul and shares in Wangsan Leisure Development Co., Ltd.