The agreement is strategically important for Delta to expand outside the U.S. market

Delta, a major American Airline, recently announced that it has acquired a 4.3% stake in Hanjin Kal Corp., the parent company of Korean Air Lines Co Ltd., which is the largest airline in South Korea. The U.S. airline has an option to raise its stake up to 10% over the time after it receives regulatory approval.

Apparently, discussions regarding the ownership have been going on with the members of the family at Korean Air Lines and Hanjin Kal, its majorly owned company, following its founder’s death in April which  raised several questions about the airline and its parent company’s future.

Sources said that Walter Cho is leading Hanjin Kal following the death of his father and the company’s former chairman, Cho Yang-ho. However, regulators have not been informed about the officials who are expected to lead the group yet. The firm supposedly has diversified businesses like logistics, budget airlines and hotels.

Reportedly, the late patriarch passed away at 70 owing to chronic illness, weeks after the decision to end his 27-year term on the airline’s board was taken by the shareholders. The stakes in Hanji Kal are currently owned by Choi’s widow, two daughters and a son.

According to reliable sources, a local activist fund had increased its stake in Hanjin Kal to around 16% which attracted the ownership structure of the group to wider attention. 29% of Hanjin is owned by the Cho family and its academic foundations that also include the 17.8% interest of late Mr. Cho.

Citing sources, both the Delta and Korean Air are part of the SkyTeam Alliance and they run a joint venture operating flights between Asia and the United States. Apparently, the agreement plays an important part in Delta’s strategic expansion outside the U.S. market through investment in stakes in other carriers and in emerging markets particularly.

Source Credit- https://uk.reuters.com/article/delta-stake/corrected-update-1-delta-air-lines-acquires-stake-in-korean-airs-parent-hanjin-kal-idUKL4N23R3BP