Delta Air Lines Inc said on Thursday it has acquired a 4.3 percent stake in partner Korean Air Lines Co Ltd's parent company with a view to expanding across Asia. The No 2 US airline said it intends to increase its stake in Hanjin Kal Corp, which owns about 30 percent of Korean Air, to 10% over time, after receiving regulatory approval. It did not disclose how much it paid for the stake.
Delta Chief Executive Officer Ed Bastian recently said he viewed the Korean Air and its Incheon International Airport hub in Seoul as a gateway to adding more destinations across Asia. The two airlines formed a joint venture last year that includes 290 US destinations and over 80 in Asia. "Long term the partnership and the joint venture is strong in terms of size and there's no reason to think it can't grow substantially into the future," Bastian said at an aviation summit this month in Seoul.
The investment follows the sudden death in April of Cho Yang-ho, the Hanjin Kal and Korean Air patriarch, which raised questions about the future of both. Since the death of his father, 43-year-old Walter Cho has led the group as chairman and CEO. However, Korean Air has yet to inform regulators about a definitive succession plan. The late tycoon died at the age of 70, just weeks after shareholders decided to end his 27-year tenure on the airline's board. Cho's widow, two daughters and Walter Cho hold stakes in Hanjin Kal.
At the Seoul conference, Bastian said he had "a lot of confidence" in the new chairman of Korean Air, noting their friendship had gone back 20 years. "So no concern from a family perspective in terms of leadership going forward," he said. The change at the top comes soon after a local activist fund raised its stake in Hanjin Kal to nearly 16%, bringing the group's ownership structure to wider attention. The Cho family and its academic foundations own 29% of Hanjin, including the late Cho's 17.8% stake.
Both Delta and Korean Air are members of the SkyTeam alliance. A spokesman at Korean Air, the flagship unit of Hanjin Kal, declined to comment. If Delta raises its stake in Hanjin Kal to 10%, it would be the third biggest shareholder after the late Cho and the local activist fund.
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