Cash-strapped Asiana Airlines could consider selling its subsidiary as the delay in negotiating a deal with potential buyer HDC Hyundai Development Company leads to increasing pressure on liquidity.

South Korean builder HDC earlier this month received approval from Russian aviation authorities for its planned takeover of Asiana Airlines. This means no more regulatory obstacles preventing the acquisition. However, HDC has reaffirmed its intention to renegotiate acquisition terms, according to sources on July 10.

A possible collapse of the deal is becoming more likely amid a prolonged delay in negotiations, industry watchers said. Regardless of the deal’s collapse, Asiana Airlines urgently needs to secure liquidity or the carrier’s proportion of impaired capital will only increase.

“Asiana Airlines could be in a state of complete capital impairment within a couple of months and to avoid this it needs to raise cash,” an industry watcher said. “Creditors would also try to keep the company afloat.”

Asiana Airlines could consider applying for the government loan program which is supposed to support companies in key industries. If the carrier chooses this option it needs to submit self-rescue plans to administrators which could likely include the sale of Asiana IDT, one of Asiana Airlines’ subsidiaries.

Since the two parties signed a share purchase agreement in December, Asiana IDT, an information and communications technology services provider, has been rumored to be put up for sale due to regulatory requirements.

HDC’s acquisition of Asiana Airlines would make Asiana IDT the third-tier subsidiary of HDC’s parent company, HDC Holdings Co Ltd. The country’s fair trade law mandates the second-tier company hold 100% of the third-tier company or sell all of its shares. Asiana Airlines held 76.22% of Asiana IDT as of the end of 2019.

If HDC acquires the carrier, it probably would prefer to sell Asiana Airlines’ entire stake in Asiana IDT because affiliate company HDC I-Controls Co Ltd has similar business operations, industry watchers said. Even if HDC ends up pulling out, Asiana Airlines could prefer to offload Asiana IDT, rather than its budget carrier subsidiaries reeling from the Covid-19 pandemic, because it can be sold quickly.

“Negotiations between the two parties are making little progress, so nothing is certain yet,” a source with knowledge of the deal said. “But Asiana Airlines appears to be open to selling its subsidiaries such as Asiana IDT or Air Busan if pressure on its liquidity continues to increase.” (Reporting by Ik-hwan Choi)