South Korea will provide $2 billion in credit to Asiana Airlines.

Follow us on social media and always stay updated

South Korea said Friday that it will provide a $2.4 trillion credit to Asiana Airlines, after a local construction company cancelled its plan to acquire the airline, in debt amid the growing impact of the coronavirus on the airline industry.

See also: Aeroméxico receives 100 million in financing for the first part of its restructuring process.

Kumho Industrial Co., which owns a majority stake in the country’s second largest airline, notified the construction company HDC Hyundai Development Co. (HDC), the termination of the agreement after failing to reduce differences over the terms of acquisition.

To help Asiana Airlines stay afloat, the KDB-operated Key Industries Stabilization Fund (KISF) will extend a $2.4 trillion ($2,021 million) credit line for the airline, the state-owned creditor said in a statement.

See also: European airlines obtained direct financial support from governments of more than $25 billion.

The KISF made the decision to avoid massive layoffs at the airline after the deal broke down and to minimize the impact on the economy in the midst of the prolonged COVID-19 pandemic, the statement said.

KDB and the Export-Import Bank of South Korea (Eximbank) have already invested a total of 3.3 trillion won ($2.78 billion) in Asiana, including 1.7 trillion won ($1.43 billion) this year.

With the failure of the deal, Asiana will come under the control of creditors, undergo restructuring and be put up for sale again, KDB said.

By Yonhap News Agency

Photo: Bill Larkins/Wikimedia