Korean Air has made plans to secure a new lifeline in the form of KRW 2.2 trillion ($1.79 billion) today to help the airline survive the current aviation crisis. The money will come in part from a government aid package and the airline issuing new shares.

Korean Air A380
Korean will return its A380 to New York next week. Photo: Getty Images

What are the details?

Korean Air has struggled to stay operational, like so many other airlines, during this crisis.

South Korea has seen passenger numbers fall a staggering 84%, from 10.6 million passengers in January to only 1.74 million passengers in March. Only half of which are international travelers.

The lack of passengers has resulted in 87% of Korean Air's fleet remaining grounded and out of service, costing the airline part of $5.27 billion shared across the industry in lost sales for the period.

Korean Air was also one of the first airlines to be affected by the virus, with a hot spot banning the carrier from Israel and becoming the first airline to ground the Airbus A380 worldwide. 

Korean Air Boeing 777
Three of Korean Air's departments could be undergoing major shakeups. Photo: Getty Images

Korean Air didn't idly sit by, with the airline putting 70% of its workforce on leave, and executives taking a 50% pay cut for the period. The airline has also started to sell off unrelated to aviation assets such as land in the city center of Seoul and shares in tourism companies.

What is the new plan?

Revealed in a press release to Simple Flying today, the airline has launched a new plan to secure KRW 2.2 trillion ($1.79 billion) to overcome COVID-19.

This money will come from two different sources. The first KRW 1 trillion will be from new shares issued to the stock market. The new shares will first be on offer to existing shareholders, and any remaining not bought will be offered to the general public. Approximately 79.3 million shares will be on sale for around KRW 12,600 each ($10).

This issuing will almost double the number of shares on the market for the airline, increasing from 95 million shares to 175 million. The listing of this new offering will be in the final week of July on the 29th.

Korean Air
Al Baker says airlines bringing back the A380 too soon are 'very foolish'. Photo: Korean Air

Another KRW 1 trillion will come from government aid packages. KRW 700 billion in asset-backed securities and bonds will be secured from the government as part of the industry-wide aid offerings, with an additional KRW 300 billion in bonds from government banks such as the Korea Development Bank and The Export-Import Bank of Korea.

The last KRW 200 billion will come as a loan from the above banks.

Whether or not this will be enough to last through the rest of the aviation crisis remains to be seen. Further radical action may need to be taken by the carrier to weather this storm.

What do you think? Is this enough for the airline to survive? Let us know in the comments.