Asiana Airlines CEO Park quits in aftermath of accounting fiasco (updated)
28/03/2019 06:23
* Asiana forced to record bigger loss after auditor
questioned
accounts
* Its shares soar after Park resigns but pare gains
* Kumho Asiana to look for an outsider for chairmanship
* Park sought creditor KDB's help to normalise airline
(Adds comments from Kumho spokesman, analyst; updates shares to
close)
By Heekyong Yang
SEOUL, March 28 (Reuters) - Asiana Airlines' 020560.KS
co-CEO resigned on Thursday and its debt-ridden parent Kumho
Asiana Group sought financial support from its top creditor
after an accounting fiasco at the South Korean carrier
threatened the group's liquidity position.
The surprise resignation of Park Sam-koo, who also quit as
chairman of the group and co-CEO of its biggest shareholder
Kumho Industrial 002990.KS , comes after the two firms failed
to get auditors' sign-offs on their annual reports last week.
That triggered warnings of credit ratings downgrades, a
sharp earnings revision for Asiana, and a massive stock-market
sell-off of the two firms on Tuesday when shares resumed trading
after a two-day trading halt.
Asiana’s shares jumped as much as 15.1 percent on Thursday
following news of Park’s resignation but pared gains to close
2.9 percent higher, while Kumho Industrial ended up losing 2.1
percent after rising as much as 8.2 percent.
"His resignation could darken the clouds over one of South
Korea’s biggest airlines as the company faces critical moments,"
said Yang Ji-hwan, an analyst at Daishin Securities.
Kumho Asiana Group said in a statement that Park met the
chairman of the group’s main creditor, Korea Development Bank
(KDB), late on Wednesday and asked for help to normalise Asiana
Airlines, the conglomerate's flagship firm.
It said it will launch an "emergency management committee
headed by vice chairman of the group to normalise our management
in a short period of time and will hire a respectable person
outside the company as the new chairman."
KDB said in a statement on Thursday that it planned to work
with the airline to improve its financial structure.
Asiana has already sold assets to improve cash flow and
reduce debt from aircraft purchases, as it battles rising fuel
costs and competition from low-cost carriers.
The carrier had to revise its accounts and disclose a bigger
annual loss this week to win auditor approval for its 2018
financial statements after the auditor raised doubts about the
statements. It also said its debt amounted to more than six
times its equity. urn:newsml:reuters.com:*:nL3N21D01H
Asiana's bigger rival Korean Air Lines 003490.KS is also
in management turmoil after shareholders removed chief executive
Cho Yang-ho from its board in a landmark vote on Wednesday,
making him the first founding family member of any South Korean
corporate giant to be forced off a board. urn:newsml:reuters.com:*:nL3N21E094
IMAGE SETBACK
The accounting fiasco comes after Asiana suffered an image
setback in July when it was unable to provide meals on some
flights after a change in caterer left the airline short. It
prompted Park to make a public apology at that time.
The airline had two CEOs, and with Park stepping down, Han
Chang-su remains its sole CEO.
Park's elder son serves as CEO at its IT services affiliate
Asiana IDT 267850.KS , while his younger daughter works as an
executive at Kumho Resort.
"The status of junior Parks won't change even after their
father leaves the group," a Kumho Asiana Group spokesman told
Reuters.
The senior Park is the biggest shareholder of Kumho &
Company, the holding company of Kumho Asiana Group, with an
ownership of 31.1 percent.
(Reporting by Heekyong Yang, additional reporting by Joori Roh,
Cynthia Kim and Ju-min Park; Editing by Miyoung Kim and
Muralikumar Anantharaman)
((joori.roh@thomsonreuters.com; +82 2 3704 5642; Reuters
Messaging: joori.roh.thomsonreuters.com@reuters.net))