Korean Air Co Ltd (KAL) faces a bumpy road offloading its businesses as the aviation industry reels from the Covid-19 pandemic.

The country’s biggest carrier has put three businesses – in-flight catering services, in-flight duty free services and the aviation training center – on the list of its assets for sale to secure liquidity. It plans to hire a domestic deal adviser to lead the sale of its in-flight duty free services and aviation training center, sources said on July 2.

A separate process is underway for the sale of the in-flight catering services with Credit Suisse as deal manager. The investment bank is said to be marketing the sale to a select handful of potential buyers.

The planned sale of the in-flight catering business could become a litmus test for investors’ interested in KAL’s other assets, industry watchers said. Several domestic private equity firms seeking to expand their portfolio in the food and beverage sector are said to have shown interest. It generated revenue of 100 billion won ($83.29 million) and operating income of 30 billion won on an annual average.

Our Home’s 2018 acquisition of HACOR, an in-flight meal provider sold by Hanjin Heavy Industries & Construction Co Ltd, can be used as a reference. KAL’s in-flight meal business could be valued at more than 500 billion won when applying the HACOR deal’s valuation multiple of 12 times, although the affect of the Covid-19 pandemic to the airline industry could have a negative impact on the value.

Whether the sale of KAL’s assets will prove a success depends on how fast the industry will recover from the pandemic, industry watchers said. As the airline temporarily cut 78 international routes, the number of available seats on KAL’s international flights has been reduced by around 80% compared to before the pandemic.

This could drag down the value of both in-flight catering and duty free businesses as they are provided to passengers on international flights only. The resumption of international flights to South Korea could have an impact on the price of KAL’s in-flight catering business as it also provides meal services to foreign airlines.

KAL’s aviation training center could draw attention from infrastructure funds with deep pockets – rather than from aircraft manufacturers hit hard by the pandemic – as the demand for full flight simulator training rises due to the reduction in flights, to maintain pilots’ airtime.

“The businesses up for sale by KAL look attractive,” a private equity firm official said. “But there is significant uncertainty over the recovery of the airline industry from the Covid-19 crisis, which appears to be the biggest obstacle to the sale.” (Reporting by Ik-hwan Choi)