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KrustyTheKlown
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Korean Air and the fallout of Hanjin shipping's collapse

Fri Sep 09, 2016 5:29 am

If you have been following the news you may know that Hanjin shipping, the shipping division of the conglomerate that owns Korean Air collapsed after Korean banks loss faith on its ability to repay around $5B USD of debt. Korean air is the biggest share holder in Hanjin shipping.

The immediate consequence of Hanjin shipping's collapse is that ports around the world are refusing to unload cargo currently on Hanjin's ships. So far Hanjin group has announced it's raising ~$90M USD for paying for the unloading of cargo currently on Hanjin's ships.

But regardless of Hanjin shipping's future, this means that Korean Air and its corporate parent are going to face large losses. Korean air has reportedlosses on 4 of its last 5 quarterly reports.

So do you think financial difficulties may be partially responsible for Korean Air and Delta's recent rapprochement?
 
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LAX772LR
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Fri Sep 09, 2016 5:48 am

KrustyTheKlown wrote:
So do you think financial difficulties may be partially responsible for Korean Air and Delta's recent rapprochement?

There's probably plenty of factors, this just may have been the final straw.

Going it alone, where they don't have to, is just going to end up with them getting their market share eaten up.
Having a rather large eqp size, while others shrink with more modern eqp, can't be helping.

A decade+ ago, KE was the "daring" Asian carrier, often trying markets completely unique to TPAC service.
Now, even the traditionally conservative Japanese and Chinese/HK carriers are trying routes that KE is not in. That can't be sitting well.
 
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readytotaxi
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Fri Sep 09, 2016 5:49 am

I don't think Korean Air will ever see a penny, they are in trouble for sure. It speaks volumes that the government will not step in to help.
On a side note Samsung Electronics has said it has goods worth about $38m on Hanjin ships in international waters. It is now considering chartering 16 freighter planes to take goods to customers - mostly in the US.
Good news for the likes of Atlas Air.
 
a380787
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Fri Sep 09, 2016 6:06 am

LAX772LR wrote:
KrustyTheKlown wrote:
So do you think financial difficulties may be partially responsible for Korean Air and Delta's recent rapprochement?

There's probably plenty of factors, this just may have been the final straw.

Going it alone, where they don't have to, is just going to end up with them getting their market share eaten up.
Having a rather large eqp size, while others shrink with more modern eqp, can't be helping.

A decade+ ago, KE was the "daring" Asian carrier, often trying markets completely unique to TPAC service.
Now, even the traditionally conservative Japanese and Chinese/HK carriers are trying routes that KE is not in. That can't be sitting well.


Just curious .... other than HKG-BOS, which CX route would you categorize as truly out-of-the-box compared to KE ? I suppose if you want to count HKG-EWR to be separate from JFK. At the same time, KE is still at places like SEA ATL LAS DFW IAH IAD that are wholly absent from CX's network.

Arguably, the only Chinese carrier that's truly reaching secondary destinations would be HU, but that's necessitated from the fact that CA and MU are blocking most of the prime route authorities out of their home hub. I see many of the random new routes like Shenzhen-SEA or Qingdao-SFO to be mostly supported by subsidies, partly by the desire to jam up route authorities, and slightly by wishful thinking. So far no Chinese carrier is at ATL, only HU is slated for LAS, none for DFW, CA is at both IAH+IAD but that's entirely due to connections with UA.

Someone has mentioned in another thread already - KE's N.A. flights don't time particularly well with those bound for mainland China, so this hypothesized notion that KE is collapsing along with Hanjin because Xiamen is flying from Fuzhou or MU is flying from Hangzhou is slightly pre-mature.
 
b747400erf
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Fri Sep 09, 2016 6:41 am

HKG-BOS connects two major financial hubs. That is not out of the box.
 
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LAX772LR
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Fri Sep 09, 2016 8:13 am

a380787 wrote:
Just curious .... other than HKG-BOS, which CX route would you categorize as truly out-of-the-box compared to KE ? I suppose if you want to count HKG-EWR to be separate from JFK. At the same time, KE is still at places like SEA ATL LAS DFW IAH IAD that are wholly absent from CX's network.

Arguably, the only Chinese carrier that's truly reaching secondary destinations would be HU, but that's necessitated from the fact that CA and MU are blocking most of the prime route authorities out of their home hub. I see many of the random new routes like Shenzhen-SEA or Qingdao-SFO to be mostly supported by subsidies, partly by the desire to jam up route authorities, and slightly by wishful thinking. So far no Chinese carrier is at ATL, only HU is slated for LAS, none for DFW, CA is at both IAH+IAD but that's entirely due to connections with UA.

Someone has mentioned in another thread already - KE's N.A. flights don't time particularly well with those bound for mainland China, so this hypothesized notion that KE is collapsing along with Hanjin because Xiamen is flying from Fuzhou or MU is flying from Hangzhou is slightly pre-mature.

That's not really what I'm getting at though.

In the '80s, '90s, and early '00s, KE was almost without exception the Asian first-mover on opening all-new TPAC routes (even same-plane 1stops), whereas the Chinese and Japanese tended to stick to the major gateways.

Now, you've got Chinese and Japanese carriers entering places like SAN, SJC, YYC, YUL, BOS, etc where KE is nowhere to be found. It's not so much what each individual airline is doing, but rather what they're accomplishing in aggregate compared to KE.
 
luftaom
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Fri Sep 09, 2016 9:36 am

b747400erf wrote:
HKG-BOS connects two major financial hubs. That is not out of the box.


Boston is not a major financial hub.

It may just scrape into the top 10 depending on how you do the maths. It's certainly not in the league of London, New York, Singapore, Tokyo and even Zuerich.
 
b747400erf
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Fri Sep 09, 2016 10:22 am

luftaom wrote:
b747400erf wrote:
HKG-BOS connects two major financial hubs. That is not out of the box.


Boston is not a major financial hub.

It may just scrape into the top 10 depending on how you do the maths. It's certainly not in the league of London, New York, Singapore, Tokyo and even Zuerich.


It is ranked 8th in the world. You want to split hairs about how to rank them but that is being pedantic. Clearly it is a centre for world finance and a large biotech and university region. The American Federal Reserve also has a regional centre there.
 
luftaom
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Fri Sep 09, 2016 10:32 am

There's a Federal Reserve branch in Kansas City.
 
b747400erf
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Fri Sep 09, 2016 10:54 am

luftaom wrote:
There's a Federal Reserve branch in Kansas City.


And what rank is the city in a global financial centre index? I spent all that time explaining why you're wrong and you cannot be bothered to reply to more than a half sentence of my reply. Thank you for wasting my time and not being able to admit you are wrong.
 
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mercure1
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Fri Sep 09, 2016 1:48 pm

KrustyTheKlown wrote:
So do you think financial difficulties may be partially responsible for Korean Air and Delta's recent rapprochement?


Not at all. These deals are not made overnight.

The thaw between DL and KE is result of new leadership at DL. Ed Bastian said so himself in interview. He has long been personal friends with KE chairman and within days of becoming CEO flew out to meet him. Surely they did not only play golf...
 
airbazar
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Fri Sep 09, 2016 3:37 pm

KrustyTheKlown"
So do you think financial difficulties may be partially responsible for Korean Air and Delta's recent rapprochement?[/quote]
Not at all considering the so called "rapprochement" started quite a while ago, and it has more to do with the fact the SkyTeam is having their lunch eaten in the Pacific.
[quote="LAX772LR wrote:
In the '80s, '90s, and early '00s, KE was almost without exception the Asian first-mover on opening all-new TPAC routes (even same-plane 1stops), whereas the Chinese and Japanese tended to stick to the major gateways.

Apples and Oranges. In the '80s, '90s, and early '00s The Chinese market wasn't nearly as large as what it is today, and the bilateral didn't allow for much expansion. In Japan there were also limitations with the bilateral and NRT. One could argue that the reason KE expanded so freely was because of the constraints in China and Japan.
luftaom wrote:
Boston is not a major financial hub.

So a top-10 financial center doesn't qualify as a major financial hub? What are you smoking? It consistently ranks second or third in the U.S. which in itself is still the world's largest economy. By definition that makes BOS one of the World's major financial hubs.
 
klakzky123
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Fri Sep 09, 2016 3:50 pm

luftaom wrote:
There's a Federal Reserve branch in Kansas City.


The Federal Reserve District based in Boston handles most of the Northeast (outside of New York). That means getting all of Connecticut and Massachusetts financial service presence. The Kansas City reserve bank handles much of the midwest (and doesn't even include Chicago which has its own district).

They're not the even close in terms of scope.
 
n729pa
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Fri Sep 09, 2016 4:26 pm

Just FYI, the figures linked with Korean Air I've seen (read) are....

"The Hanjin Group also proposed a self-rescue plan that included a capital injection of up to KRW 400 Bn ($358 M) by Korean Air, which will now not be forthcoming.......
........The Hanjin Group declared that Korean Air has suffered losses of KRW 393 Bn ($344m) from investments in Hanjin Shipping. These originate from the write-of on loans and from a 33.2% equity stake in the shipping line that was acquired in 2014."

It's hardly peanuts, but then I'd better not mention nuts and Korean Air in the same breath had we......
 
luftaom
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Sat Sep 10, 2016 7:10 pm

I'm not for a second saying that Boston isn't regionally very important - because it is. I'm not slagging Boston here but it is certainly not a major financial hub of the world.

There is a huge gulf between the importance of the top 5 or 6 centres and the rest (which includes Boston).

In over a decade of working on all manner of international deals from LNG plans, gas pipelines, toll roads, office blocks and even the occasional major syndicated (debt/acquisition/project) facility for a multinational, Boston has never figured.

There are no major international banks with their HQ in Boston. Undoubtedly regional banking gets done out of Boston and Boston is important for a whole host of other reasons but it's not a major financial hub of the world.

My point about Kansas City was exactly as b747 suggested - having a Fed regional centre there doesn't make it a major financial hub of the world.
 
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TWA772LR
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Sat Sep 10, 2016 8:48 pm

The first thing to go at KE will be the bowls for the nuts.
 
jfk777
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Sat Sep 10, 2016 9:46 pm

luftaom wrote:
I'm not for a second saying that Boston isn't regionally very important - because it is. I'm not slagging Boston here but it is certainly not a major financial hub of the world.

There is a huge gulf between the importance of the top 5 or 6 centres and the rest (which includes Boston).

In over a decade of working on all manner of international deals from LNG plans, gas pipelines, toll roads, office blocks and even the occasional major syndicated (debt/acquisition/project) facility for a multinational, Boston has never figured.

There are no major international banks with their HQ in Boston. Undoubtedly regional banking gets done out of Boston and Boston is important for a whole host of other reasons but it's not a major financial hub of the world.

My point about Kansas City was exactly as b747 suggested - having a Fed regional centre there doesn't make it a major financial hub of the world.


Banks are not the only major financial firms, Boston has a little mutual funds firm called Fidelity Investments. Mass Mutual, one of the biggest life insurance companies in the USA, is also based in Massachusetts. The New England life insurance is also based there. Putnam Mutual funds could be based there too. Sad Bank of Boston is gone but they were not the only game in town.
 
blueflyer
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Sat Sep 10, 2016 9:46 pm

Unless Hanjin Shipping was returning significant dividends to its shareholders, its collapse may not have much of an effect on Korean Air. Korean Air will have to write down the value of its shares, if it hasn't done so already, but it will be a paper loss. Sure, many an analyst whose sole expertise seems to be in comparing current period's bottom line figure against previous period's will panic and proclaim the end of the carrier. Korean Air is not responsible for the debts of Hanjin Shipping and will most likely not be one won out of pocket.

If Korean Air used its shares in Hanjin to guarantee a loan or bonds, it's a different story, but that is very unlikely.
 
luftaom
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Sat Sep 10, 2016 10:24 pm

jfk777 wrote:

Banks are not the only major financial firms, Boston has a little mutual funds firm called Fidelity Investments. Mass Mutual, one of the biggest life insurance companies in the USA, is also based in Massachusetts. The New England life insurance is also based there. Putnam Mutual funds could be based there too. Sad Bank of Boston is gone but they were not the only game in town.


I agree with all of that. You'd be easily able to say the same things about most major regional centres. My point is that Boston is not a major financial centre of the world.
 
Planesmart
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Sat Sep 10, 2016 10:26 pm

blueflyer wrote:
If Korean Air used its shares in Hanjin to guarantee a loan or bonds, it's a different story, but that is very unlikely.

There are Group inter-company loans and guarantees. The Board and bankers will be doing their very best to quarantine Korean and the rest of the Group from the fallout.
 
rbavfan
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Sat Sep 10, 2016 10:28 pm

luftaom wrote:
I'm not for a second saying that Boston isn't regionally very important - because it is. I'm not slagging Boston here but it is certainly not a major financial hub of the world.

There is a huge gulf between the importance of the top 5 or 6 centres and the rest (which includes Boston).

In over a decade of working on all manner of international deals from LNG plans, gas pipelines, toll roads, office blocks and even the occasional major syndicated (debt/acquisition/project) facility for a multinational, Boston has never figured.

There are no major international banks with their HQ in Boston. Undoubtedly regional banking gets done out of Boston and Boston is important for a whole host of other reasons but it's not a major financial hub of the world.

My point about Kansas City was exactly as b747 suggested - having a Fed regional centre there doesn't make it a major financial hub of the world.



Sorry but the top 10 is always considered the major players in all list. Saying only the top 5-6 in a debate is like Phoenix did to get around a law limiting publicly funded building projects over a certain price to a vote by the public. To get the parking garage for the baseball stadium the cut off several blocks of downtown Phoenix from the map of what is downtown. Mapping out 4 parking structures so that by "the Book" there were now not enough parking spaces downtown so no vote was needed. Including cutting 2 lots within a 1/4 mile from the ballpark out of downtown.

So yes you are being a politician.
 
luftaom
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Sat Sep 10, 2016 11:00 pm

rbavfan wrote:

Sorry but the top 10 is always considered the major players in all list. Saying only the top 5-6 in a debate is like Phoenix did to get around a law limiting publicly funded building projects over a certain price to a vote by the public.

So yes you are being a politician.


I'm not sure that I agree with that.

To use another example - iron ore production. 4 or 5 countries are the major players. Number 10 is Sweden - they produce about 2% of the production of the biggest producer, only 5% of the amount of the second largest producer and just 1% of the world's total.

In the iron ore production field - the top 4 or 5 are the major players ... 6 to 10 simply aren't.

This is akin to my point about the world's major financial centres. There's a large gulf between the top 5 or 6 and the rest.
Last edited by luftaom on Sat Sep 10, 2016 11:16 pm, edited 1 time in total.
 
777PHX
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Sat Sep 10, 2016 11:15 pm

klakzky123 wrote:
luftaom wrote:
There's a Federal Reserve branch in Kansas City.


The Federal Reserve District based in Boston handles most of the Northeast (outside of New York). That means getting all of Connecticut and Massachusetts financial service presence. The Kansas City reserve bank handles much of the midwest (and doesn't even include Chicago which has its own district).

They're not the even close in terms of scope.


The KC branch actually handles most of the plains states. St. Louis and Cleveland also have branches as well which service much of the midwest, along with Chicago.
 
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PacificBeach88
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Sat Sep 10, 2016 11:37 pm

I'm not sure why Boston's banking center is such a controversy. Boston has a huge financial center. Not to mention it has 8.1 million people in the metro/CSA. Boston is a major city that has a disproportionate size of banks, higher education, biomedical, database/computer services firms, amongst others. I'm not even from Boston, so I'm not defending it out of some hometown pride, but claiming Boston isn't a major city / destination / business center / financial center in the USA is just plain stupid.


https://en.wikipedia.org/wiki/Combined_ ... ical_areas
 
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adamh8297
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Sat Sep 10, 2016 11:53 pm

jfk777 wrote:
luftaom wrote:
I'm not for a second saying that Boston isn't regionally very important - because it is. I'm not slagging Boston here but it is certainly not a major financial hub of the world.

There is a huge gulf between the importance of the top 5 or 6 centres and the rest (which includes Boston).

In over a decade of working on all manner of international deals from LNG plans, gas pipelines, toll roads, office blocks and even the occasional major syndicated (debt/acquisition/project) facility for a multinational, Boston has never figured.

There are no major international banks with their HQ in Boston. Undoubtedly regional banking gets done out of Boston and Boston is important for a whole host of other reasons but it's not a major financial hub of the world.

My point about Kansas City was exactly as b747 suggested - having a Fed regional centre there doesn't make it a major financial hub of the world.


Banks are not the only major financial firms, Boston has a little mutual funds firm called Fidelity Investments. Mass Mutual, one of the biggest life insurance companies in the USA, is also based in Massachusetts. The New England life insurance is also based there. Putnam Mutual funds could be based there too. Sad Bank of Boston is gone but they were not the only game in town.


I heard a little startup called GE just moved to Boston too - probably won't mean much to business travel from BOS. :mrgreen:

Joking aside - could this shipping issue hamper any KE growth plans - maybe even for them to defer some plane deliveries????
 
stlgph
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Sun Sep 11, 2016 6:16 am

luftaom wrote:
jfk777 wrote:

Banks are not the only major financial firms, Boston has a little mutual funds firm called Fidelity Investments. Mass Mutual, one of the biggest life insurance companies in the USA, is also based in Massachusetts. The New England life insurance is also based there. Putnam Mutual funds could be based there too. Sad Bank of Boston is gone but they were not the only game in town.


I agree with all of that. You'd be easily able to say the same things about most major regional centres. My point is that Boston is not a major financial centre of the world.
[quote="777PHX"]

As someone with roots in finance, you would be wrong.


FYI Federal Reserve System Regional Banks/Operations
Atlanta
Boston
Chicago
Cleveland
Dallas
Kansas City
Minneapolis
New York
Philadelphia
Richmond
San Francisco
St. Louis

...just sayin
 
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LAX772LR
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Sun Sep 11, 2016 7:03 am

airbazar wrote:
Apples and Oranges. In the '80s, '90s, and early '00s The Chinese market wasn't nearly as large as what it is today, and the bilateral didn't allow for much expansion. In Japan there were also limitations with the bilateral and NRT. One could argue that the reason KE expanded so freely was because of the constraints in China and Japan.

But goes straight to the point I'm making though: KE's competitors have (for lack of a better description) finally gotten their stuff together, and it's letting them expand while KE stays stunted.

They had to do something different, and addressing whatever issues that were holding them back from further DL cooperation is apparently one such thing.
 
stlgph
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Re: Korean Air and the fallout of Hanjin shipping's collapse

Sun Sep 11, 2016 7:43 am

Well KE certainly hasn't been stunted in the advertising/marketing department. Lots of ads on TV & radio, right now they're advertising on my network more than any other airline and a "new-ish" billboard going up in Times Square at 49th & 7th avenue (ish) along with other strong web pushes. Usually such an effort compliments a new service/route or a whole new branding campaign.

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