As expected, Korean Air (KE, Seoul Incheon) has tentatively agreed to sell its lucrative inflight catering and duty-free business to Seoul-based private equity investment firm Hahn & Company, for around KRW1 trillion won (USD835 million), the Korea Economic Daily reported. The final sum will be set at a board meeting on July 7.

Before the current aviation crisis, Korean Air had annual duty-free sales of about USD135 million.

Covid-19 will ruin this year’s performance, but given the flag carrier’s high-spending passenger profile and strong route network in China, many in the industry assume the business will bounce back once the crisis fades. Korean Air and Hahn & Company are reportedly in final discussions on the deal's terms and conditions.

The private equity company is reportedly also considering acquiring Korean Air’s aviation training centre on Yeongjong Island, where Seoul Incheon Airport is also located, the report claimed, as the cash-strapped carrier looks to raise further funds.

In related news, Korean Air received a commitment for another KRW1 trillion on July 2, this time as government aid in addition to a previously reported KRW1.2 trillion (USD1 billion) bailout package from state lenders the Korea Development Bank and the Export-Import Bank of Korea.

On top of that, the company plans to raise an additional KRW1.15 trillion (USD960 million) by issuing new shares, with parent Hanjin KAL participating via offering bonds with warrants. All of these measures should bring Korean Air more than KRW4 trillion (USD3.34 billion) in total.

Korean brokerage Daeshin Securities revealed on July 6 that Korean Air subsidiary Jin Air (LJ, Jeju) was likely to raise financing in the second half of 2020. The LCC's total amount of cash and cash equivalents and short-term financing at the end of the first quarter stood at about KRW180 trillion (USD150 billion) and there is a high possibility of a paid-in capital increase during the fourth quarter, the brokerage said.