Korea's State Banks to Help Asiana Airlines Get Back on Track

Korea's two state-run policy banks will inject a combined 1.7 trillion won to save the beleaguered flag carrier Asiana Airlines.

The banks, Korea Development Bank and Export-Import Bank of Korea, made the announcement Tuesday after conducting meetings to decide on the amount of financial support.

The additional assistance came after real estate developer HDC Hyundai Development, which is set to acquire Asiana Airlines, requested that the two banks extend repayment deadlines for the airline.

Last year, the two state-run banks allocated a combined 1.6 trillion won ($1.3 billion) for Asiana Airlines.

It consists of credit lines of 800 billion won, 500 billion won worth of the airline's perpetual bonds, and a 300 billion won credit guarantee.

Efforts have so far been short of getting the airliner, which was hit by the coronavirus outbreak and lower interest rates, back on track.

HDC had planned to repay the airline's 1.2 trillion won it owed the two state-run banks by issuing new stocks of the airline. It also planned to complete the 2.5 trillion-won Asiana Airlines acquisition deal by issuing 300 billion won of bonds.

An industry source noted that HDC seems to be waiting for the government "to remove some hurdles such as cutting interest costs."

The two banks are also involved in a scheme based on corporate bond purchase that may reach 50 trillion won to help key industries, including airliners.