Creditors plan to inject $2 billion into debt-ridden Asiana Airlines after a planned sale of South Korea’s second-largest carrier collapsed, a state bank said.

Kumho Industrial pulled the 2.5 trillion won ($2.11 billion) sale of the South Korean to Hyundai Development Co and brokerage Mirae Asset Daewoo.

They had agreed to buy control of Asiana in December, but called for better terms after the airline’s debt surged in subsequent months after the coronavirus pandemic tore through markets and wiped out demand for travel.

Asiana CEO Han Chang-soo said it was necessary to preserve Asiana Airlines as a going concern. State-run lead creditor Korea Development Bank said creditors will relaunch Asiana’s sale as soon as conditions permit.

Hyundai Development plans to respond after legal review, it said in a regulatory filing, adding that the deal fell apart due to Asiana’s failure to meet preconditions.

Mirae Asset said it would respond according to future progress as a financial investor.

Asiana, which competes with bigger Korean Air Lines, had a total debt of 12.8 trillion won as of end-June, up more than 33% from a year earlier, according to its regulatory filing.

Meanwhile, Singapore Airlines said it would cut 4,300 positions, or around 20% of its staff, due to the debilitating impact of the coronavirus pandemic on demand in the largest job losses in its history.

The airline said after taking into account a recruitment freeze, natural attrition and voluntary departure schemes, the potential number of staff affected would be reduced to around 2,400 in Singapore and overseas.

The company reiterated its forecast that it expected to operate less than 50% of its normal capacity by its financial year end of March 31, 2021. It is currently at 8%.

The airline has no domestic network and is wholly dependent on international demand at a time when many borders remain effectively closed.

It said to remain viable in an uncertain landscape it would operate a smaller fleet and reduced network in coming years, having already announced a review of its Airbus SE A380 planes for a possible S$1 billion ($731.21 million) in impairments.

The job losses on Thursday were the first it had announced since the start of the pandemic, which has seen it raise S$11 billion of equity and debt to shore up its liquidity.

“The next few weeks will be some of the toughest in the history of the SIA Group as some of our friends and colleagues leave the company,” Singapore Airlines Chief Executive Goh Choon Phong said in a statement.

“This is not a reflection of the strengths and capabilities of those who will be affected, but the result of an unprecedented global crisis that has engulfed the airline industry,” he said.

State investor Temasek Holdings and others put together a $13.3 billion rescue package for Singapore Airlines in March, including a bridging loan it has repaid and S$9.7 billion of convertible notes it has yet to use. The International Air Transport Association has forecast it will take until 2024 for global passenger traffic to return to pre-pandemic levels. Rival Qantas Airways has announced plans to cut nearly 30% of its pre-pandemic staffing, while Cathay Pacific Airways is reviewing its operations with an announcement expected in the fourth quarter.

Separately, China’s International Aviation and Aerospace Exhibition, the country’s biggest airshow, will go ahead in November, the organiser said on Wednesday, backtracking on an earlier announcement the 2020 event had been cancelled due to COVID-19.

“As of now, China’s 13th Zhuhai Airshow will still be held as scheduled. If there is any change, please refer to the official news and website,” a spokesman said in a second statement.

An email from the spokesman earlier on Wednesday had said that the airshow, scheduled for November, had been cancelled due to the coronavirus pandemic, and the next one will take place in 2022. He later said that statement was based on his own “prediction”.

The biennial event usually draws key suppliers - such as Airbus SE, Boeing Co and Commercial Aircraft Corp of China (COMAC) - and has traditionally been used by Beijing to show off its growing aviation capability, such as military fighters and drones.

The announcements come as foreign nationals are largely barred from entering China due to concerns about importing coronavirus cases and severe restrictions on international flights.

This year’s largest aerospace expo, Britain’s Farnborough Airshow, was cancelled because of travel curbs and an industry downturn resulting from the pandemic.

Reuters