Two South Korean state-owned banks that loaned KRW3.6 trillion won (USD2.5 billion) to Asiana Airlines (OZ, Seoul Incheon) over 2019 and 2020 are calling in the remaining debt, according to the Chosun Ilbo newspaper.
The daily reports that KRW1.38 trillion (USD957 million) remains outstanding, and the Korea Development Bank and Export-Import Bank of Korea (KEXIM) have decided to recover the amount by the end of this quarter. The decision follows final approvals for Asiana's merger with Korean Air and the latter recently paying KRW1.5 trillion (USD1.04 billion) for its 63.9% stake in Asiana.
Both banks stepped in to assist debt-laden Asiana Airlines when it faced collapse after a failed takeover bid. The pandemic exacerbated the airline's financial challenges. All up, the Korea Development Bank loaned the carrier KRW2.67 trillion (USD1.85 billion), and KEXIM loaned KRW930 billion (USD645 million).
As Asiana's fortunes began to recover post-pandemic, it went on to repay KRW180 billion (USD125 million) in 2022, KRW940 billion (USD652 million) in 2023, and KRW1.1 trillion (USD762.7 million) in 2024. With the merger now on track, the Korean government has reportedly decided to recoup the last of what's owed.
In 2023, when the merger faced objections from various antitrust regulators, the banks faced the likelihood of the loans going bad, and the Korea Development Bank began exploring strategies for recouping its money, including selling Asiana.
Meanwhile, the same bank provided Korean Air with KRW800 billion (USD555 million) to finance the merger. That debt remains outstanding, with the Korea Development Bank awaiting the merger's finalisation before pursuing repayment.
