[THE INVESTOR] Jin Air, a budget airline owned by Hanjin Group, could be put up for sale depending on the results of the government’s review of its business license later this month, according to industry sources on June 12.
The Transport Ministry is set to decide penalties on the air carrier for registering Cho Hyun-min, an American citizen and the younger daughter of Hanjin Group Chairman Cho Yang-ho, as a board member for six years between 2010 and 2016. Under the laws, a non-Korean cannot assume board membership at a local airline and the firm could face fines or cancellation of its business license.
Amid public anger toward the Cho family’s abusive behavior in a series of incidents, the ministry is under more pressure to impose harsher sanctions on Jin Air like business suspension.
Even though the outlook for the ministry’s decision still remains divided, speculations are already growing about the firm’s possible sell-off.
If Jin Air is put up for sale, it could be an attractive deal for potential bidders hoping to enter the nation’s burgeoning low-cost carrier market where the entry barrier is so high. Based on the market value of the KOSPI-listed firm worth more than 900 billion won, the deal price is estimated to reach 600 billion won, including the management premium.
But critics say it is unlikely for the ministry to put some 2,000 jobs at stake. Moreover, Hanjin would make all-out efforts to keep the lucrative business that makes up almost 30 percent of the group’s total revenue now. Despite a leadership crisis, the company posted a whopping 56 percent growth in operating profit in the first quarter this year.
“It would be difficult for Hanjin to give up the fast-growing LCC business,” KB Securities analysts Kang Seo-jin and Jung Hye-jung wrote in their latest report. “In addition, if Jin Air is separated from Hanjin, it cannot cooperate with Korean Air and that could hurt its profitability overall.”
The police is investigating the Hanjin heiress’ alleged assault on an ad agency employee during a business meeting in April. The incident has led to allegations of physical and verbal abuse as well as charges of tax evasion and smuggling by other family members, including her father, mother and older sister Cho Hyun-ah, the protagonist of the notorious “nut rage” fiasco back in 2014.
By Park Ga-young (email@example.com)