Hoban Sets Its Sights on Korean Air, Built Up by Hanjin for Half a Century

[Financial News] Korean Air is set to merge with Asiana Airlines in December. After Hanjin Group spent decades building it up from 1969 onward, Korean Air is poised to take off as a global carrier. A new variable has emerged just before takeoff, with reports that Hoban Group has increased its stake in Hanjin KAL Corporation, Korean Air’s holding company, and that the Korea Fair Trade Commission is conducting a business combination review.
According to industry sources on the 3rd, the Korea Fair Trade Commission is conducting a business combination review following Hoban Group’s filing to increase its stake in Hanjin KAL Corporation. The situation is taking on the appearance of a shareholding battle as Hanjin Group Chairman Walter Cho disclosed a purchase of 325,000 shares, representing a 0.48% stake.
Hanjin KAL Corporation says that Cho’s increase in his stake was planned independently of Hoban. The implication is that it is not in a shareholding battle with Hoban. Cho’s control remains secure, and friendly stakes are substantial, including Delta Air Lines, which has a joint venture (JV) with Korean Air.
Some have speculated that Cho is buying part of the stake held by Japan Airlines, a major shareholder friendly to him. Regardless of whether that is true, however, Hanjin KAL Corporation appears to be operating on the assumption that the move is unrelated to Hoban.
In fact, the Korea Fair Trade Commission’s business combination review does not look only at whether a party is the largest shareholder. It examines the distribution of shares and the relationships among shareholders, effectively taking friendly shareholdings into account. Delta Air Lines, a key friendly shareholder, holds a 14.9% stake; combined with the 20.57% held by Cho and related parties, the total exceeds 35%. If the share purchase Cho disclosed the previous day begins in December and is completed on New Year’s Day, the combined stake will reach 36%.
Industry observers expect the Korea Fair Trade Commission to limit itself to a simplified review and approve only Hoban Group’s stake increase for the stated purpose of “simple investment.” They also expect no surprises in the launch, under Cho’s leadership, of the combined Korean Air in December and Jin Air next March, formed by merging the three low-cost carriers (LCCs)—Jin Air, Air Seoul and Air Busan.
However, analysts say volatility stemming from Hoban could continue. The terms of Cho’s position as an inside director at Hanjin KAL Corporation, along with those of three independent directors, expire in time for the regular shareholders’ meeting next March. This could give Hoban Group an opportunity to try to gain a seat on the board. The moves of Korea Development Bank (KDB), which holds a 10.58% stake, are another variable. KDB acquired the stake while supporting the restructuring of the aviation industry, and will need to divest it once the combined Korean Air launches.
Hanjin Group has worked for more than half a century to build the business into the combined Korean Air. In 1969, founder Cho Choong Hoon acquired Korean Air Lines Corporation from the government, clearing its chronic losses and debts, and built it into a strong airline that went on to help establish the global airline alliance SkyTeam. In 2008, Hanjin founded the LCC Jin Air, and in 2024 it added Asiana Airlines to its fold, transforming itself into a global aviation group.
[email protected] Kim Yun-ho Reporter