Gov`t Decided to Support 140 Billion Won for Korean Air and 110 Billion Won for Asiana Airlines

The Ministry of Construction and Transportation (MCT) announced yesterday that it decided to provide 140 billion won for the Korean Air (KAL) and 110 billion won for Asiana Airlines in loans, which have had financial difficulties due to the decreased number of passengers since the terrorist attacks in the U.S.

A MCT official said, "The Ministry allotted the fund, considering the number of its flights, its current financial status, and its request for the financial support."

A total amount of 250 billion won in loans to domestic airlines is included in the second supplementary budget of this year. The loan condition was reported to be a 5-year installment plan with 3-year grace period, with 5 percent annual interest rates. The fund will be provided by the Korea Development Bank.

Meanwhile, along with the government fund, the Korean Air plans to make 700 billion won within this year by issuing ABS amounting to 500 billion won and by selling real estates and planes. Asiana also plans to issue ABS amounting 250 billion won with 5-year expiration on December 3rd. Thus, financial difficulties of the two airline companies are anticipated to get better.

Asiana Airlines said yesterday, "We submitted the financial statement to the Financial Supervisory Service to issue ABS based on the earnings through the transportation of future passengers and cargo. We plan to complete the issuing of ABS on December 3rd through the subscription and payment procedure."

Ja-Ryong Koo bonhong@donga.com