Hanjin KAL, the holding company of Korean Air (KE, Seoul Incheon) and its conglomerate parent Hanjin Group, has decided to sell all of the shares it owns in the group’s low-cost carrier Jin Air (LJ, Jeju) to be directly held by the flag carrier, it revealed in a statement on June 13.
The move appears to confirm reports that emerged over a month ago that it is a manoeuvre ahead of Korean Air’s long-awaited merger with Asiana Airlines (OZ, Seoul Incheon), to position a combined low-cost carrier that also integrates Asiana’s Air Busan (BX, Busan) and Air Seoul (RS, Seoul Incheon) under the flag carrier’s direct control.
The assumption is that elevating the flagship airline as a de facto intermediary holding company would enhance the group’s dominance, creating synergies between the carriers by centring on Korean Air. Combining the budget carriers in this way would also resolve any regulatory issues with the merger ahead of time, and it would help optimise the route network by solving overlapping routes and strengthening connecting flights.
So, on June 13, Hanjin KAL’s board of directors opted to sell all 28,660,460 shares it held in Jin Air - a 54.91% stake worth KRW604.8 billion (USD470 million).
The sale will be completed by June 15 and will return Jin Air to Korean Air as its subsidiary nine years after the low-cost carrier was repositioned under the holdco’s wings as part of Hanjin’s restructuring in a turnaround from financial troubles at the time. Jin Air was established as a wholly-owned Korean Air subsidiary in 2008.
Once completed, the group’s corporate governance structure will change from: Hanjin KAL (holding company) - Korean Air/Jin Air (subsidiaries), to: Hanjin KAL (holding company) - Korean Air (subsidiary) - Jin Air (sub-subsidiary).
