The stocks of Korea’s full-service carrier Asiana Airlines Inc. and its parent Kumho Industrial have been suspended for two trading days from Friday after their outside auditor suspended full approval of the airliner’s statement for fiscal 2018 questioning validity in the numbers.

Asiana Airlines in a regulatory filing on Friday said that it was issued a qualified opinion by external auditor Samil PricewaterhouseCoopers (PwC) on its financial statements for the fiscal year ended Dec. 31, 2018. On the same day, Kumho Industrial disclosed it was also issued a qualified opinion due to its subsidiary Asiana Airlines whose earnings results are integrated into its consolidated financial statement.

Trading of both Asiana Airline and Kumho Industrial shares are suspended for two days under the regulations as they must clarify to the stock exchange operator for the reasons their books have been rejected.

A qualified opinion is issued when an auditor decides it was unable to gather sufficient information on specified area(s) and/or the company being audited has not followed Generally Accepted Accounting Principles (GAAP).

Asiana Airlines disclosed a revised statement for 2018 to reflect the auditor’s guidance.

It booked 105 billion won ($92.9 million) in net loss on a consolidated basis for full 2018, revised sharply up from a deficit of 10.4 billion won reported in its earlier statement. Operating profit stopped at 88.7 billion won, down from previous 178.4 billion won. Sales were revised down to 6.79 trillion won from 6.85 trillion won.

Samil PWC said it was not able to find adequate and suitable evidence for certain aspects of Asiana Airlines` fiscal 2018 financial statements including provisions for repair and maintenance of leased aircrafts, recognition of frequent flyer program liabilities, and fair valuation of the affiliate company’s shares it acquired during the fiscal year.

The deterioration of its income is expected to affect the planned offering of perpetual bonds worth 150 billion won this year to bump up liquidity prior to the introduction of stricter accounting standards. Under the new rule, its aircraft leasing contracts will be reflected as a lease to push up its debt ratio, which already reached 700.5 percent as of the end of last year.

The two stocks resume trading on Tuesday.

By Jung Hee-young and Cho Jeehyun

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