The heads of South Korea’s two biggest airlines left their seats within a week, amid financial scandals. Chairman and co-CEO of Asiana Airlines, the second biggest airline in South Korean, just quit his position after accounting scandal at the airline. Less than a week before, the head of the country’s flag carrier Korean Air was ousted from the company’s board as he is being investigated for embezzlement.
Asiana Airlines co-CEO quits amid accounting mismanagement and huge losses
Park Sam-koo, co-CEO and chairman of Asiana Airlines and co-CEO of parent company Kumho Asiana Group, is quitting his roles in order to “take responsibility” for financial trouble the group is currently in.
“The group will be run under the emergency management system centering on Lee Won-Tae, vice chairman of Kumho Asiana Group, for a while in order not to have a management vacancy. A reputable person will be appointed as group chairman in a short time,” Park has allegedly noted in an email sent to employees on March 28, 2019, as quoted by Korean Herald.
Before Park’s resignation, Asiana Airlines had two CEOs. The other CEO ‒ Han Chang-su ‒ remains in his role.
Earlier in March 2019, Asiana Airlines failed to obtain auditors’ signature on their annual financial report. Consequently, trading of the airline’s stocks were suspended from March 22 to 26, 2019. Two South Korean credit rating agencies threatened to downgrade its credit ratings.
Later the company revised its financial report, disclosing $24.92 million operating profit (down from previously disclosed $78.10 million) versus $172.57 million net loss (up from previously disclosed $92.45 million), according to Reuters.
Family ties and embezzlement charges Korean Air
Meanwhile, Asiana Airlines bigger competitor ‒ Korean Air ‒ is caught in its own internal drama. The head of South Korea’s flag carrier, Cho Yang-ho, failed to secure two-thirds of shareholders’ votes and was ousted from Korean Air board on March 27, 2019.
In October 2018, Cho was indicted for charges including embezzlement, tax evasion and breach of trust. He is set to stand trial in an embezzlement case as prosecutors say he took millions-of-dollars in fees meant for the carrier by unfairly awarding contracts to family-owned businesses. Cho denies the charges.
Cho held his tenure on Korean Air’s board for the past 27 years and his son, Cho Won-tae, remains the president of the airline. Hanjin KAL group, the parent of the carrier, is also controlled by the family. Following ousting from Korean Air, Cho managed to sustain his board seat at Hanjin KAL during another shareholders voting on March 29, 2019.