SOUTH KOREA. Korean Air has tentatively agreed to sell its inflight duty free and meal service units for almost KRW1 trillion (US$840 million) to Hahn & Company, the country’s second-largest private equity firm, according to reputable financial title The Korea Economic Daily. The Moodie Davitt Report Senior Retail and Commercial Analyst Min Yong Jung, based in Seoul, is seeking verification of the report.
Korean Air, hit hard by the COVID-19, has long run the world’s most successful inflight retail business.
Last year sales hit US$134-135 million, down by -5.6% year-on-year, though the depreciation of the Korean Won against the US Dollar implied that duty free sales were actually flat in a difficult year. This year’s performance will be ruined by COVID-19 but given Korean Air’s high-spending passenger profile and strong Chinese route network, the business is likely to bounce back as the crisis eases.
The report claimed that the two companies are in final discussions on the terms and conditions of the deal, saying that Korean Air plans to report to the board meeting tomorrow, 7 July.
Additionally, Hahn & Company is considering buying Korean Air’s aviation training centre on Yeongjong Island, the report claimed.
On 2 July, the cash-strapped flagship carrier received a KRW1 trillion (US$837 million) government commitment for further aid, added to the promised KRW1.2 trillion (US$1 billiion) bailout package from Korea Development Bank and the Export-Import Bank of Korea in April.