[FlowTracer] Capital in the Sky… Aerospace and Defense Saw KRW 1.7423 Trillion Move Over 2 Years

Airline reorganizations, battles for control over low-cost carriers, and large-scale procurements in the defense industry were successively recorded in public disclosures around the same time. Grouped by their high policy sensitivity and large procurement scale, we look at how the use of funds was divided during this period.

Over the past two years, the combined disclosure amount of just seven major companies with significant overlapping weight in large airlines, low-cost carriers, and defense is KRW 1.7423 trillion, of which about 79% is concentrated in three pillars: Korea Aerospace Industries (KAI) CB of KRW 500 billion, Asiana Airlines CB of KRW 475 billion, and Sono International's direct investment related to T'way of KRW 402.8 billion.

Asiana procured with CBs, and Sono bought with cash

During the Korean Air merger and acquisition process, Asiana Airlines successively disclosed convertible bonds worth KRW 175 billion in June 2024 and KRW 300 billion in November 2025, and Sono International spent KRW 402.8 billion during the same period buying stakes in T'way Air and T'way Holdings with cash.

Asiana Airlines' two rounds of CBs were both allocated to Korean Air. This means that they filled their operating funds with mezzanine during the merger process, which is different from choosing a paid-in capital increase or simple borrowing.

Sono International acquired a 14.90% stake in T'way Air for KRW 105.6 billion in July 2024, put KRW 47.2 billion into JC Aviation in October of the same year, and invested KRW 250 billion into a 46.26% stake in T'way Holdings in March 2025. The three transactions combined amount to KRW 402.8 billion.

From KAI's KRW 500 Billion to AST's KRW 91 Billion, Defense Also Chose CBs

Korea Aerospace Industries issued KRW 500 billion worth of CBs in February 2026. Based on Flow Tracer's aggregation, it accounts for approximately 30.2% of the total convertible bond issuance amount with disclosure reception dates from January 1 to March 23, 2026. Bonds with warrants were not included in the denominator. This is by far a massive volume in the CB market for the same quarter, and it is a case where a large-cap defense stock prioritized mezzanine over paid-in capital increases or general borrowing.

As summarized in the table, Air Busan, AST, SKAI, and T'way Air accumulated mezzanine through split and simultaneous disclosures. SKAI overlapped procurement and acquisition on one axis by preparing funds with CBs and then adding more in cash for the stake in Sky Intelligence.

The Role of Funds Diverged Within the Same Pillar

Although most of the KRW 1.7423 trillion was tied to the three pillars of KAI, Asiana, and Sono, the threads diverged. Asiana Airlines drew in KRW 475 billion in CBs with Korean Air as the allocatee, forming a structure where the acquired side built a support pillar with mezzanine within the merger framework. Sono International built a control line over the low-cost carrier by expanding stages with cash, from a 14.90% stake in T'way Air to 46.26% in T'way Holdings.

Korea Aerospace Industries' single transaction of KRW 500 billion is a case where a large-cap defense stock single-handedly held the center of gravity of the convertible bond market in the same quarter, unlike the split procurements of Air Busan, AST, and T'way shown in the table.

Even for procurements recorded at the same time, their natures differed. Asiana endured its operating funds with mezzanine within the merger structure, Sono expanded its control line over a low-cost carrier with cash, and KAI held the center of gravity of defense procurement with a single large-scale CB. All three pillars moved aerospace and defense capital in the same quarter, but they chose different paths of mezzanine and cash.

*Amounts and ratios are based on the Flow Tracer DB, and the disclosure reception date range used for the main text aggregation is from March 1, 2024, to March 23, 2026.

This article was written based on Flow Tracer, created by News Epoch to track capital flows in the Korean VC/PE market.