T’way Air, which is poised to take over some of Korean Air Lines (KAL)’ European routes due to KAL’s merger with Asiana Airlines, is in the spotlight as it overhauls its management structure ahead of a major expansion.

Vice Chairman Na Sung-hoon will take the helm of the budget airline as it returns to profitability.

According to sources on Tuesday, Na was recently nominated as an internal director for the first time. The move is considered unusual, given T’way Air’s previous practice of having a board dominated by professional managers. Na is the son of Na Chun-ho, the founder of YeaRimDang Publishing, the majority shareholder of T’way Holdings that operates the airline.

If the younger Na assumes a director position within T’way Air, analysts anticipate that he will play a leading role in the overall management of the group. He currently sits on the boards of both YeaRimDang and T’way Holdings.

He recently restructured the shareholder agreement with T’way Air’s second largest shareholder, private equity fund (PEF) manager JKL Partners.

Na junior, along with T’way Holdings, had the right to purchase T’way Air’s convertible preferred shares (CPS) within a 30 percent range from funds managed by JKL., but this provision was removed from the agreement.

With this change, JKL has seemingly converted the preferred shares into common shares to increase its ownership percentage, with its ownership of T’way Air at 26.77 percent as of February 26th, 2024. Considering that the major shareholder, T’way Holdings, and related parties held 30.7 percent as of the end of September 2023, the difference in ownership percentage between the two parties is now around 3.9 percent.

In the aviation industry, T’way Air, which stands to benefit from the planned merger of KAL and Asiana Airlines, is seen as streamlining its shareholder agreements to strengthen its stable management structure. This effort aims to facilitate the exit of the second majority shareholder and simultaneously initiate changes in the management system centered around the owner’s family.

T’way Air is set to take over four European routes from Korean Air (Paris, Rome, Barcelona, and Frankfurt) as part of the ongoing merger process. Analysts suggest that this management restructuring is an effort to assure European Union competition authorities of its stable governance structure and commitment to responsible ownership management during the route transfer process.

By Cho Yun-hee and Minu Kim

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