SEOUL -- Negotiations for the acquisition of South Korea's Asiana Airlines by construction company HDC Hyundai Development have broken down due to reduced travel amid the coronavirus pandemic, a source familiar with the deal said on Friday.
HDL has been in talks with banks that own Asiana's debt, and following the COVID-19 outbreak early this year asked for revision of the terms of the purchase.
According to the source, the state-backed Korea Development Bank, which led the banks, met with HDC's head in late August. The banks agreed to debt relief and asked for HDC to make some concessions as well. The negotiations fell through after HDC declined to compromise, insisting that the scale of the change that the airline industry is going through is too big to swallow.
Struggling Kumho Asiana Group announced the sale of Asiana Airlines, its core subsidiary, in April 2019. In December, HDC agreed on a purchase of 2.5 trillion won ($2.1 billion). However, the outbreak brought uncertainty to Asiana's earnings prospects and led to renegotiations between the banks and HDC.
Now that the deal with HDC has fallen through, the airline's operator may be temporarily put under bank management. A source from the side of the banks suggested that sales proceedings could restart after 2021.