Korean Air succession still under discussion: chairman

“Since the late former chairman passed away suddenly, he did not leave much to say to the family. But based on what he has said when he was alive, the harmony of the family, discussions between family members are still underway,” Cho said.

“He has frequently said keeping the family in harmony is to protect the company,” he said, adding that negotiations over the succession process were “going well.”

Chairman Cho, also known as Walter Cho, is the eldest son of the late Chairman Cho Yang-ho. He has two sisters, Hyun-ah and Hyun-min, who served respectively as vice president and senior executive of Korean Air, but stepped down in recent years after scandals surrounding misconduct on their part. Market insiders have also said Cho Won-tae’s succession came about in a rush and that Hanjin Group wasn’t ready for the power transfer.

Currently, the combined stake owned by Hanjin Group’s owner family comes to 28.95 percent, including 2.34 percent held by Won-tae, 2.31 percent owned by Hyun-ah and 2.3 percent held by Hyun-min. Korean Air, the air carrier unit of Hanjin KAL, is valued at 380 billion won ($321 million). The late chairman’s wife, Lee Myung-hee, owns 5.95 percent. 

Cho also refrained from commenting on the inheritance tax -- which is expected to be around 200 billion won and due for payment by October -- saying any comments on the issue could influence the stock price of his company. 

According to Korean Air, the bereaved family received 40 billion won in May as severance pay for the late chairman, based on the company policy.
The air carrier’s new head remained low-key, saying he’d had to take the chairman post for the sake of the company. 

Rather than presenting grand plans, Cho said he would maintain the status quo and carry out his predecessor’s mission: maintaining the legacy of Hanjin Group as Korea’s leading transport empire.

“I accepted the chairman position for the sake of the company’s future, but it still feels unfamiliar when someone calls me chairman. I will continue to run the business based on the business philosophy of the former chairman and the founder, which is to focus on transportation,” Cho said.

“If needed, amid the rapidly changing industry trend, I will seek business change through discussion with board members,” he added. 

On reports and rumors that the Korean Air family is in all-out efforts to defend its management rights from the Korea Corporate Governance Improvement Fund -- the air carrier’s second-largest stakeholder, with holdings of 16 percent -- he stressed that KCGI is just “one of the shareholders” to him.

“The KCGI is Hanjin KAL’s biggest stakeholder, no more or less than that. We have not met them privately, nor did they ask us to meet. The last time we met was last year,” he told reporters. 

Last week, the KCGI increased its stake in Hanjin KAL to 15.98 percent, according to Grace Holdings. Its stake amounted to 14.98 percent in April.

This has led to the KCGI’s stake in Hanjin Group having a less than 2 percentage point gap with that of the late Chairman Cho, who was the largest shareholder with a 17.84 percent stake. 

The new head of Korean Air held his first-ever press conference on the final day of the annual general meeting of IATA, widely viewed as his debut as the head of air carrier.

The three-day event, hosted by the Korean air carrier, brought the industry’s environmental impact and the need to restore public trust in aircraft certification under the spotlight.

While presenting figures related to the aviation industry being responsible for emitting 2.5 percent of carbon emissions around the world, IATA Chairman Alexandre de Juniac bristled at one question: He was asked to comment on criticism that the aviation industry is a “pollutant.” The IATA head urged the government to carry out policy work to invigorate the development of sustainable aviation fuel.

“We have launched 10 programs to slow down carbonization and reduce CO2 emission. We are the only industry to adopt such measures worldwide to help this carbon reduction policy. Stop calling us pollutants.”

On escalating tension between the US and China, de Juniac said the organization is against trade protectionism and it is expected to have a negative impact on cargo transport but not passenger transport.

The event wrapped up with the parties agreeing to accelerate the global implementation of the One ID initiative and radio frequency identification for baggage tracking. The One ID initiative is a plan to use a single biometric identifier to move passengers through the airport, without the need for paper travel documents. 

For the first time, IATA named Christine Ourmieres-Widener, CEO of Flybe, as recipient of the diversity and inclusion award for raising the profile of aviation among young people and inspiring young women to join the aviation industry, according to organizers. Air New Zealand was also honored as a team for establishing programs on gender equality and accelerating the advancement of women.

Casten Spohr, CEO of Lufthansa, was also elected as chairman of the IATA board of governors.

By Kim Da-sol, Cho Chung-un 
(ddd@heraldcorp.com) (christory@heraldcorp.com)