Airlines Ditch Art and Duty-Free Business in Quest for Cash
(Bloomberg) -- Korean Air Lines Co. is poised to sell its in-flight catering and duty-free businesses, joining other embattled carriers in offloading assets including art collections to raise cash after the coronavirus plunged the aviation industry into crisis.
The Korean flag-carrier will sign an agreement as early as next week to sell its catering business to private equity firm Hahn & Co. for about 1 trillion won ($840 million), Korea Economic Daily reported Friday, citing an unidentified source. Korean Air last month confirmed it was in talks with Hahn for both the catering and duty-free units and the two had outlined a sale plan. A spokesman for the airline said Friday that talks were ongoing.
Covid-19 has put airlines under extraordinary pressure as travel restrictions force them to ground planes and drastically rein in costs through layoffs, salary cuts and other steps. Many have turned to capital markets and governments for financial support. Others have taken more novel approaches, such as British Airways auctioning some of its art collection.
Japan’s ANA Holdings Inc. said this week it is selling a pilot-training center in Tokyo, while Korean Air has also already announced plans to sell a plot of land in Seoul and its stake in a marina operator. The Korean carrier’s biggest fundraising came from a 1.13 trillion won rights issue completed last month and 1.2 trillion won in loans from state-run lenders.
Despite the dash for cash, Korean Air was a rarity among carriers globally in posting an operating profit for the April-June period, as demand for Korean goods drove its cargo business. Compatriot Asiana Airlines Inc. followed suit with a positive quarter as well.
Korean Air’s shares rose 2% Friday, their biggest gain since Aug. 12. They’ve advanced 57% from a March low, but are still down 25% since the start of 2020.
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