Korean Air eyes US$176 million ESG bonds
Offering to help finance acquisition of fuel-efficient Boeing 787 Dreamliners
30 Jun 2021 | Michael Marray

Korean Air plans to issue environmental, social and governance (ESG) bonds to help finance the acquisition of new Boeing 787 Dreamliners. The ESG bonds, expected to be issued on July 7, will have maturities of 1.5 years, two years and three years, and will amount to about 200 billion won (US$176 million). The exact issue amount will be determined after the results of forecasted demand become available on June 29.

Until now, ESG bonds in South Korea have been issued mainly by state-run companies, financial institutions and manufacturing companies. This will be the first offering from an airline.

Korea Investors Service (KIS), Korean Air’s ESG bond evaluator, said the airline was given the highest grade for the green bond after it secured excellent scores in terms of project eligibility, transparency and management/operations systems. KIS also noted that the new Boeing 787s will greatly reduce greenhouse gas emissions.

At the Paris Air Show in June 2019, Korean Air signed a memorandum of understanding with Boeing to acquire an additional 20 units of the fuel-efficient 787s. It also signed a deal to lease another ten units from US lessor Air Lease Corporation.

Korean Air plans to introduce the Boeing 787-10 model as early as next year. The airline already has ten Boeing 787-9s in its fleet. It is now phasing out older Boeing 777s and Airbus A330s, and so the bonds would qualify for ESG designation as transitioning torwards better fuel efficiency. 

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