Korean Air to divest oil unit, looks to sell aircraft

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Korean Air will sell its entire stake in oil refiner S-Oil to a unit of Saudi Aramaco, and is looking to divest 13 aircraft as well.

The carrier expects to raise W1.98 trillion ($1.95 billion) from the sale, which is scheduled to complete on 27 August at the earliest. The funds raised will be used to repay debts and “improve its financial structure,” it says in a Korea Exchange disclosure.

The carrier owns the S-Oil stake through its Hanjin Energy unit, and Aramco will buy it via its Aramco Overseas Company unit.

Besides selling the S-Oil stake, the airline is also looking to sell 13 Boeing 747-400 and 777-200 aircraft, as well as other assets such as real estate and investments. Through those sales, it hopes to raise a total of W3.49 trillion and use them to pare down its debt.

Based on an investor presentation for its fiscal first quarter to 31 March, the carrier has total assets of W23.3 trillion and total liabilities of W20.7 trillion. This leaves the carrier with around W2.58 trillion worth of equity.

Flightglobal’s Ascend Fleets database shows that as of 10 July, Korean Air has 14 Boeing 747-400s, 17 747-400 Freighters, and 18 777-200ER aircraft in its fleet. Most of them are owned by the carrier.