Korean Air Lines Co., South Korea's top air carrier, said Friday it has decided to create a holding company in coming months, a move that it says will enhance transparency of its corporate governance.
The decision, reached at the company's board of directors meeting earlier Friday, calls for splitting the company into Hanjin KAL Holdings and Korean Air.
The airline said the process of creating a parent company is set to be completed in Aug. 1, and the holding company plans to raise its stake in Korean Air to more than 20 percent -- a mandatory legal requirement for a holding company -- within two years.
The holding company will be responsible for management of its affiliate companies and investment in new business as well as intellectual properties such as branding and trademarks.
Meanwhile, Korean Air will focus on airline business operations from air transport, aerospace, catering, and in-flight duty-free sales to limousine buses.
The transformation into a holding company "will increase transparency of corporate governance and management stability," Korean Air said in a regulatory filing. It also said the move will boost the company's asset value.
Shares of Korean Air closed at 41,200 won (US$36) on the Seoul bourse on Friday, down 0.12 percent from the previous session's close.