Korean Air issues samurai bond, secures W700b in policy financing

Korean Air announced Monday that it had successfully issued a samurai bond worth 20 billion yen ($124 million), backed by a guarantee from the Export-Import Bank of Korea. A samurai bond is a yen-denominated bond issued in Japan by a foreign company or institution.

The issuance closed despite persistent external uncertainties, including high oil prices and a volatile exchange rate. Investors cited Korean Air's stable profitability, underpinned by a balanced portfolio spanning passenger and cargo operations.

Industry observers also noted that expectations surrounding operational synergies from the merger with Asiana Airlines and the potential expansion of Korean Air's global network helped drive investor demand.

Korean Air also secured a separate package of large-scale policy financing to support its next-generation fleet procurement. The Export-Import Bank of Korea will provide a total of 700 billion won in financing — comprising 300 billion won in export financing and 400 billion won from its supply chain stabilization fund — in line with the airline's fleet expansion plan. The supply chain stabilization fund is a policy financing instrument established to help key industries respond to shifts in global supply chains and ensure the stable operation of sectors critical to national economic security.

The policy financing is expected to give fresh momentum to Korean Air's fleet modernization drive. The airline announced last year that it plans to invest a total of $36.2 billion to add 103 high-efficiency Boeing aircraft. The order covers 20 Boeing 777-9s, 25 787-10s, 50 737-10s and eight 777-8F freighters, with deliveries scheduled to continue through the late 2030s.

The next-generation aircraft use lightweight materials, including carbon composites, making them more fuel-efficient and lower in carbon emissions than current models. The new fleet is expected to cut fuel costs and contribute to the airline's carbon neutrality goals, while the latest technology is also expected to improve safety and maintenance efficiency.

"The successful issuance of this samurai bond is a meaningful achievement that confirms the trust of global investors in Korean Air's solid business competitiveness and future growth potential," a Korean Air official said. "Through the introduction of next-generation aircraft and fleet modernization, we will further enhance customer service and operational efficiency, and strive to become the world's most beloved airline."

Meanwhile, at a shareholder briefing on the Asiana Airlines merger held recently at Korea Investment & Securities' headquarters in Yeouido, Korean Air set out its goal of breaking into the global top 15 in passenger operations and the global top five in cargo, with a long-term ambition of becoming a top-10 global airline.

Korean Air is targeting the launch of the combined carrier on Dec. 17. The integrated airline is projected to reach annual sales of around 23 trillion won, operate a fleet of more than 230 aircraft and employ approximately 28,000 staff. Korean Air also expects its route network to expand to about 120 cities, with passenger capacity rising more than 55 percent and cargo capacity growing more than 10 percent.