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High debt tests third-generation heir of Korean Air

New CEO Cho Won-tae faces task of reducing 1,200% debt-to-equity ratio

KIM JAEWON, Nikkei staff writer | South Korea

SEOUL -- Curbing high debt levels at Korean Air Lines is the first major task for  new chief executive Cho Won-tae. The third-generation heir to the family-run transportation conglomerate is seeking to raise 457.7 billion won ($404.5 million) next month by issuing new shares to reduce the company's debt-to-equity ratio, which stands at almost 1,200%, though the level of investor interest is still unclear.

South Korea's largest airline and flag carrier said debt reached 22.1 trillion won in December, up 1.8% from a year ago. This represents 1,178% of its equity of 1.9 trillion won, up from 910% three months ago. That is far higher than that of its smaller local rival Asiana Airlines, whose debt-to-equity ratio was 688% in December.

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