With its planned sale to Hyundai Development Co (HDC) now likely to fall through, Asiana Airlines (OZ, Seoul Incheon) has started reviewing a Plan B. The indebted carrier has deployed a taskforce to review its options, which include the possible sale of its subsidiaries Air Busan and Air Seoul, BusinessKorea reported.

Kumho Asiana Group owns the largest stake in Asiana, 31.05%, via holding company Kumho Industrial. A consortium of HDC and Mirae Asset Daewoo agreed in December to assume a 76.5% stake in Asiana for KRW2.5 trillion won (USD2.1 billion) by buying Kumho’s stake and issuing new shares. But on April 29, HDC postponed the move indefinitely.

"Asiana Airlines has no choice but to consider a Plan B, because it faces delisting as it is in complete capital erosion due to accumulated deficits," a source told BusinessKorea.

Kumho Asiana Group reportedly lacks the resources to keep Asiana afloat in its current state, while Asiana Airlines' employees are mounting resistance against remaining part of the conglomerate as they say they have lost trust in the group’s top management.

A more viable option would be to stage separate sales of Asiana Airlines and its subsidiaries, including low-cost carriers Air Seoul and Air Busan. Under this scenario, some of Asiana’s routes to Southeast Asia, Japan, and China would be handed to the LCCs as Asiana focuses on Europe, North America, Beijing Capital, Shanghai Pudong, and Tokyo Haneda.

Insiders have predicted that when the collapse of the HDC deal is confirmed Asiana Airlines will present a new sale plan to creditors. HDC's stock purchase deadline of June 27 has passed, but Kumho insists that the terms of acquisition can be renegotiated as Hyundai failed to meet some of the agreement's key preconditions.

In related news, full-service carriers Asiana Airlines and Korean Air (KE, Seoul Incheon) both saw encouraging estimated results for the second quarter of 2020 thanks to a buoyant cargo business, the Korea Economic Daily reported.

The average estimate among investment firms put Korean Air's operating profit at KRW11.8 billion (USD9.9 million), a swing from a KRW566 billion (USD473 million) loss in the first quarter, while Asiana Airlines' result was an estimated KRW83.2 billion loss (USD70 million), more palatable than the KRW208.2 billion (USD174 million) loss it sustained for the first quarter. Both airlines are due to report their second-quarter results on August 15.