Share trading halted [Asiana financial troubles]
Mar 21, 2019, 11:59 pm
#1
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Share trading halted [Asiana financial troubles]
According to Reuters,
Kind of curious if this means anything or if it is just some oversight.
The Korea Exchange has suspended trading in shares of Asiana Airlines Inc, after an auditor for South Korea’s second-biggest carrier said it lacked enough information to judge its value.
Mar 23, 2019, 1:22 am
#3
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"We can’t rule out the possibility of liquidity risks growing, as this undermines the credibility of its accounting information, and therefore its access to the capital market,” Moody’s Investor Service’s South Korean unit wrote in a note, saying it will consider lowering its rating of Asiana’s credit."
Mar 23, 2019, 2:29 pm
#4
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PWC are the auditors. Asian Fails to Get Accounting Sign-Off. Article quotes Moody's:
Mar 24, 2019, 3:05 pm
#5
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I imagine this has more to do with embezzling or misappropriation of funds from OZ to other Kumho Group ventures than an indication that Asiana suspending operations is imminent. Far more likely to suspend operations IMO is WOW Air.
Mar 25, 2019, 9:36 am
#6
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Considering OZ is generating a good US$650 million in cash a year from operating activities, I highly doubt they're anywhere near going under. That is, if they stop messing about in businesses they have no business being in and of course, assuming their financials are accurate.
Last edited by stupidhead; Mar 25, 2019 at 9:44 am
Mar 26, 2019, 7:54 am
#7
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https://www.reuters.com/article/asia...-idUSL3N21D01H
Asiana Airlines Fettered by Excessive Aircraft Leasing Costs - ??????? - BusinessKorea
This is sad, I think OZ has done a wealth of good for people who don't want to fly KE for personal reasons.
With revised numbers hiking the debt to equity ratio, and rating agencies potentially downgrading to non-investment grades, it would create an impossible situation for OZ.
Why lease that many planes though?
Asiana Airlines Fettered by Excessive Aircraft Leasing Costs - ??????? - BusinessKorea
This is sad, I think OZ has done a wealth of good for people who don't want to fly KE for personal reasons.
With revised numbers hiking the debt to equity ratio, and rating agencies potentially downgrading to non-investment grades, it would create an impossible situation for OZ.
Why lease that many planes though?
Mar 27, 2019, 12:10 pm
#8
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https://www.reuters.com/article/asia...-idUSL3N21D01H
Asiana Airlines Fettered by Excessive Aircraft Leasing Costs - ??????? - BusinessKorea
This is sad, I think OZ has done a wealth of good for people who don't want to fly KE for personal reasons.
With revised numbers hiking the debt to equity ratio, and rating agencies potentially downgrading to non-investment grades, it would create an impossible situation for OZ.
Why lease that many planes though?
Asiana Airlines Fettered by Excessive Aircraft Leasing Costs - ??????? - BusinessKorea
This is sad, I think OZ has done a wealth of good for people who don't want to fly KE for personal reasons.
With revised numbers hiking the debt to equity ratio, and rating agencies potentially downgrading to non-investment grades, it would create an impossible situation for OZ.
Why lease that many planes though?
As such, leasing a high % of your a/c is not a problem (look at IndiGo, VietJet Air and so on). BTW, I assume we are talking about operating leases. Gives an airline a lot of flexibility, no need to arrange debt, possibly quicker access to growth capacity, reduces residual value risk etc. etc. Airlines can also make nice upfront profits from sale-and-leasebacks. Plus there is plenty of competition in the leasing market, so airlines can actually get some really attractive deals.
Very few airlines globally are investment grade. I'm not sure whether local ratings (e.g. KIS) are 100% comparable to S&P, Fitch, Moody's.
The Korean airline industry is very unique.
Mar 28, 2019, 12:09 am
#9
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Some of those figures in that latter article simply do not make sense.
As such, leasing a high % of your a/c is not a problem (look at IndiGo, VietJet Air and so on). BTW, I assume we are talking about operating leases. Gives an airline a lot of flexibility, no need to arrange debt, possibly quicker access to growth capacity, reduces residual value risk etc. etc. Airlines can also make nice upfront profits from sale-and-leasebacks. Plus there is plenty of competition in the leasing market, so airlines can actually get some really attractive deals.
Very few airlines globally are investment grade. I'm not sure whether local ratings (e.g. KIS) are 100% comparable to S&P, Fitch, Moody's.
The Korean airline industry is very unique.
As such, leasing a high % of your a/c is not a problem (look at IndiGo, VietJet Air and so on). BTW, I assume we are talking about operating leases. Gives an airline a lot of flexibility, no need to arrange debt, possibly quicker access to growth capacity, reduces residual value risk etc. etc. Airlines can also make nice upfront profits from sale-and-leasebacks. Plus there is plenty of competition in the leasing market, so airlines can actually get some really attractive deals.
Very few airlines globally are investment grade. I'm not sure whether local ratings (e.g. KIS) are 100% comparable to S&P, Fitch, Moody's.
The Korean airline industry is very unique.
Mar 29, 2019, 3:12 am
#10
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The point being local ratings are not necessarily comparable to the ratings of big 3.
I recall KE and OZ had local ratings (KIS, KR, NICE) of A- / BBB+ (in that ballpark) a few years ago. By conventional credit metrics, can't imagine the big 3 would have rated them anywhere close.
I recall KE and OZ had local ratings (KIS, KR, NICE) of A- / BBB+ (in that ballpark) a few years ago. By conventional credit metrics, can't imagine the big 3 would have rated them anywhere close.
Mar 29, 2019, 8:29 am
#12
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The point being local ratings are not necessarily comparable to the ratings of big 3.
I recall KE and OZ had local ratings (KIS, KR, NICE) of A- / BBB+ (in that ballpark) a few years ago. By conventional credit metrics, can't imagine the big 3 would have rated them anywhere close.
I recall KE and OZ had local ratings (KIS, KR, NICE) of A- / BBB+ (in that ballpark) a few years ago. By conventional credit metrics, can't imagine the big 3 would have rated them anywhere close.
Mar 29, 2019, 11:49 am
#13
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If Asiana goes down, the mother group Kumho will probably go down as well, hence the decision of the CEO.
Mar 29, 2019, 8:42 pm
#14
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Asiana definitely falls under the definition of TBTF in Korea, I expect that the Industrial Bank of Korea will step in if .... does indeed hit the fan. If Asiana fails, then the entire Gumho group fails and that would be political suicide for the current government.
Apr 1, 2019, 2:08 am
#15
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I do not believe the rating scale to be the same (could be wrong, but remember looking into this some years ago). BTW, tried to find the rating on Moody's and could not. How do they list it?