Korean Air will raise W2.2 trillion ($1.8 billion) in fresh capital – W1 trillion from a new share issue and W1.2 trillion in government aid – to overcome challenges posed by the Covid-19 pandemic.

The carrier will issue 79 million shares at W12,600 each, a move it says was decided at a board meeting today. This will increase the total number of issued shares to 175 million.

It plans to increase paid-in capital by first allocating shares to existing shareholders before offering the remaining shares to the public.

Korean’s shares closed at W18,300 on 12 May. The final issue price will be confirmed on 6 July and the new shares will be listed from 29 July.

The board also decided to accept W1.2 trillion in government aid, extended by the Korea Development Bank (KDB) and the Export-Import Bank of Korea (Exim Bank).

This takes the form of W700 billion in asset-backed securities, backed by air cargo operations; W300 billion worth of perpetual bonds embedded with stock conversion rights; and a W200 billion asset-backed loan.

Korean Air will continue to carry out self-rescue measures to overcome the dismal business environment due to Covid-19,” it said in a statement today.

This includes previously announced pay cuts and voluntary leave, as well as the sale of non-core assets to boost liquidity.

In March, the airline raised nearly W623 billion from asset-backed securities, collateralised against future passenger ticket sales from its South Korean office that will be settled by credit card.