Asiana Air Boeing 747 Freighter Crashes in South Korea Waters; Two Onboard

Asiana Airlines (020560) Inc., South Korea’s second-largest carrier, said the crash of its cargo freighter in the sea south of Jeju island earlier today caused 200.4 billion won ($190 million) of damage.

The Boeing Co. (BA) 747-400 aircraft was carrying two crewmembers and 58 tons of cargo to Shanghai from South Korea’s Incheon International Airport before problems with the controls, the airline said in an e-mailed statement. The cost of damage is based on the book value of the plane, the carrier said in a separate regulatory filing.

The plane was heading for Jeju when communications were cut at 4:11 a.m., about an hour after takeoff, Asiana said. Rescue workers are searching for the crewmembers and the airplane’s black-box flight recorder, which may help determine the cause of the accident, the Ministry of Land, Transport and Maritime Affairs said. The airline fell the most in more than four months in Seoul trading following the crash, its first since 1993.

“The crash may damage Asiana’s reputation if the airline is found to be responsible,” said Kang Seong Jin, an analyst at Seoul-based Tong Yang Securities Inc. Insurance will likely cover the lost cargo and plane, limiting direct costs, he said.

There may have been a fire on board before the crash, the transport ministry said in a statement.

Insurance Companies

Asiana is focusing on the search efforts and doesn’t have immediate estimates of losses or damages, Jason Kim, a spokesman for the airline, said by phone. It’s too early to speculate on the cause of the crash, he said. The plane was carrying technology products, paint and other liquids.

The aircraft is insured for $122 million under an agreement with eight insurance companies, including LIG Insurance Co., Samsung Fire & Marine Insurance Co. and Hyundai Marine & Fire Insurance Co., Asiana said in the filing.

The airline dropped 4.7 percent, the most since March 14, to 11,050 won at the 3 p.m. close in Seoul trading. Korean Air Lines Co., the nation’s biggest airline, gained 0.2 percent.

Asiana had nine 747 freighters and a 767 cargo plane at the end of March, according to its website. The company’s sales from its freight business increased 3.2 percent in the first quarter to 3.21 billion won, accounting for 26 percent of the total.

To contact the reporter on this story: Seonjin Cha in Seoul at scha2@bloomberg.net; Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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