Korean Air, interim agreement with Seoul city to sell’Songhyeon-dong land’

Input 2021.03.04 13:58

Korean Air (003490)Seoul City and Korean Air, which have been in conflict over the sale of the site in Songhyeon-dong, Jongno-gu, Seoul, have tentatively agreed to mediate the National Rights Commission.

According to the airline industry on the 4th, Seoul and Korean Air will hold a final agreement on the sale of the Songhyeon-dong site as early as next week and sign a mediation. A Korean Air official said, “The exact schedule has not been set yet, but we are in discussions with related organizations for a smooth negotiation.” With this agreement, the industry believes that Korean Air has, in effect, accepted Seoul’s demands.

It is reported that the Seoul Metropolitan Government and Korean Air have agreed to not specify the timing of contract sales in this mediation. Earlier, the two sides planned to hold a signing ceremony for the final agreement on the sale of the Songhyeon-dong site in November of last year, but the agreement just before the final conclusion was canceled due to confrontation over the specific timing of the sale agreement.

In the Kwon Ik-Com arbitration, the Korea Land and Housing Corporation (LH) was discussing a’three-party exchange’ in which the Songhyeon-dong site was purchased and exchanged with the Seoul Metropolitan Government, but the Seoul Metropolitan Government did not give up its position that the contract was not specified.

It is known that the Seoul Metropolitan Government has also tried not to specify the date of the western license test site, which was mentioned as an exchange site, due to concerns about delays in the timing of the contract due to controversy. Last year, LH Corporation also announced that it did not consider the Western License Examination Site as a candidate for public housing projects. In light of the provisional agreement between Seoul and Korean Air, the industry believes that the Seoul Metropolitan Government has also reached an agreement on land exchange with LH.

The agreement gave a green light to Korean Air’s self-help plan to overcome the liquidity crisis after being hit by the coronavirus. Initially, Korean Air planned to increase its capital by selling the Songhyeon-dong site for at least 500 billion won last year, but when the city of Seoul announced that it would become a park, there was a conflict. Some point out that there is still an unstable factor as the timing of payment for the sale is still not specified.