Published on : Friday, July 6, 2018
A South Korean court is denying the prosecutors an arrest warrant based on multiple allegations, including embezzlement and fraud.
It was a rare bit of good news for Cho Yang-ho, the head of Korean Air Lines Co. He is the father figure of a clan whose string of public misdeeds have helped fuel a wave of anger aimed at the family-controlled conglomerates that dominate South Korea’s economy.
The Korean Air has been in the hot seat as prosecutors and the public focus on a number of allegations involving the Cho family, including illegal hiring, luxury-goods smuggling, violent outbursts at subordinates and other corporate malfeasance.
Mr. Cho isn’t out of the woods yet, as he will have to defend himself against pending allegations. But his reprieve comes at a difficult moment for Korean Air and Asiana Airlines Inc., 020560 0.61% South Korea’s other major carrier.
In recent months, the airline shares have tumbled due to higher fuel prices, a weaker Korean won and other headwinds.
Since recently hitting a high for the quarter on June 12, Korean Air shares have fallen 17% over the past three weeks. Asiana shares have dropped by nearly 20% over that same period of time. Meanwhile, Jin Air Co. Korean Air has a market capitalization of about $2.3 billion, down by more than 25% from the end of January. The company’s shares were slightly higher Friday morning. All three airlines have had recent safety mishaps, including a collision between a Korean Air plane and Asiana jet on a runway in Seoul last week. In addition, Asiana hasn’t been able to serve meals on some of its planes since Sunday after switching catering suppliers.