by Agence France-Presse
Atlanta-based Delta Air Lines has purchased a stake in Korean Air’s parent company, helping shore up the family that owns the firm against the building threat from activist shareholders.
Delta acquired a 4.3% stake in Hanjin KAL it said Thursday, adding that it could increase the position to 10 percent “after receiving regulatory approval”.
The stake acquisition comes a year after the two airlines launched a joint venture, providing access to nearly 300 destinations in the US and 80 spots in Asia.
It is a boost for Hanjin KAL’s new chairman Walter Cho and will help the airline “defend its management rights against any attacks of activist hedge funds”, a Korean Air official was quoted as saying by South Korean’s Yonhap News Agency.
They include the Korea Corporate Governance Improvement (KCGI) fund that owns a nearly 16-percent stake in the company and is demanding larger returns and more transparency.
In April, Cho took control of Hanjin KAL from his father Cho Yang-ho, who was kicked off the board by shareholders backed by activist funds just days before he died.
The acquisition sent shares in Hanjin KAL tumbling 15 percent Friday. Shares in Korean Air, South Korea’s flag carrier, also dropped 2.6 percent.