Korea's largest resort group seeks to acquire management control of T'way Air

A T'way Air passenger jet / Courtesy of T'way Air Sono urges T'way CEO to step down By Lee Min-hyung Sono Hospitality Group, Korea's leading hotel and resort chains operator, announced Wednesday that it is moving to acquire the management rights to T’way Air, of which the group is currently the second-largest shareholder. The group is demanding a drastic reshuffle of the budget carrier’s top executives to improve its poor safety measures and tainted corporate image. Along with the leadership reshuffle, it also urged T’way to increase its capital for management stability.

Sono, which used to be known as Daemyung, holds a stake of 26.77 percent in the carrier. T’way Holdings and Yerimdang are the largest shareholders of the low-cost carrier (LCC), with a combined stake of 30.



06 percent. With Sono securing a significant stake in T’way, rumors have long circulated that the company will soon initiate actions to take over management control of the airline. “Sono Hospitality Group’s rich infrastructure here and abroad will help T’way Air strengthen its diverse product launches and boost customer satisfaction, which will also contribute to increasing shareholders’ value,” Seo Joon-hyuk, the group’s chairman, said.

“The group will identify the aviation business as its next growth engine, and we will rise to become a globally leading firm (after acquiring T’way Air’s management rights).” If Sono succeeds in acquiring T’way, the group will be able to create a broader value chain for tourism encompassing hotels, resorts and aviation. Earlier this week, Sono submitted a proposal for T’way Air’s upcoming regular shareholders’ meeting in March.

If the proposal passes the shareholders’ meeting, the airline’s incumbent CEO Jeong Hong-geun and three other executives whose terms end next month will be replaced. “Given the insufficient maintenance budget and manpower, T’way Air has a low level of perception in aviation safety," Sono said in a statement demanding improvement in T’way’s management activities. It also took issue with T’way’s repeated involvement in flight delays and a series of other controversies on its safety, saying that the airline has failed to ensure credibility in aviation safety.

Sono also left open the possibility of taking over the management rights of another budget airline, Air Premia. Last November, Sono International, the group's holding firm, purchased an 11 percent stake in Air Premia at 58.1 billion won ($40.

42 million) from JC Partners, becoming its second-largest shareholder. The group made it public that it will consider merging the two LCCs if it succeeds in acquiring their management rights. The two carriers' routes do not overlap much, so the group expects the potential merger will establish a balanced portfolio in flight operations encompassing short-range routes around Asia as well as long-range ones to Europe and the Americas.

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