Concerns continue over Asiana Airlines’ failure to agree on cargo unit sale

[Photo by Yonhap]

Asiana Airlines Inc., South Korea’s second-largest air carrier, held an extraordinary board meeting on Monday to decide whether to sell its cargo business which failed to reach a conclusion. The failure also raised concerns due to its unexpected length and contentious nature.

The meeting was initially expected to reach a conclusion quickly as the board members had already shared their opinions on the sale of the cargo business at their earlier meeting on October 24, but the meeting, which began at 2 p.m., did not conclude until 9:30 p.m. The agenda was not even put to a vote, and the discussions became heated and contentious.

The main factors contributing to the unexpected contentious meeting were two-fold. First, the abrupt resignation of Jin Kwang-ho, the head of Asiana’s safety and security division, from his position as an inside director just before the board meeting created a situation where only three out of the five board members needed to say ‘yes’ for a motion to pass, instead of the usual four out of six members requirement.

There was also controversy around whether Yoon Chang-bun, a senior advisor at Kim & Chang law firm and an outside director of Asiana Airlines, could participate in the voting process, given his affiliation with the law firm, which had been advising Korean Air Lines Co. during its takeover.

The debate over the validity of his votes led to a lengthy discussion and Yoon’s sudden departure. He participated in the board meeting remotely as he was out of the country.

While Asiana Airlines maintained that Yoon’s qualifications as an independent director had been thoroughly reviewed by Sejong, another Korean law firm, some board members argued that Sejong, which has been advising Asiana Airlines in the takeover, is also not impartial.

Yoon’s sudden exit altered the dynamics of the board meeting by reducing the quorum to four members, with three votes till required to approve any proposal. There were attempts to engage Yoon into the voting process, but other board members opposed this move, resulting in a lack of consensus. Asiana Airlines will resume discussions on November 2.

The industry’s response to the situation was mixed. While some legal experts suggested that Yoon’s involvement with Kim & Chang might present a conflict of interest, others argued that a comprehensive assessment of his background and role in the context of the Korean Air Lines-Asiana Airlines merger was necessary.