Korean Air-Asiana, merger clock is getting faster… "Merger review completed"

[Korea Financial Times, Son Wontae] Korean Air, which must undergo corporate merger reviews from 14 competition authorities around the world for its merger with Asiana Airlines, has received final approval from the US Department of Justice (DOJ), following Europe. As a result, Korean Air has brought forward the closing date (payment date) of the Asiana stock acquisition contract, which was originally scheduled for the 20th, to the 11th.

According to industry sources on the 4th, Korean Air received final approval from the US DOJ, the last competition authority for corporate merger reviews with Asiana, the day before. It has been nearly 4 years since Korean Air declared its intention to acquire Asiana, which was in financial difficulties, in November 2020.

Korean Air has already passed the merger review by 13 competition authorities (Turkey, Taiwan, Thailand, the Philippines, Malaysia, Vietnam, Korea, Singapore, Australia, China, the UK, Japan, and Europe) excluding the US.

Korean Air transferred four European routes (Rome, Italy; Paris, France; Frankfurt, Germany; Barcelona, ​​Spain) that are raising concerns about monopoly to T'way Air, a low-cost domestic carrier. Afterwards, it decided to sell Asiana's cargo division to Air Incheon. Five popular routes in the U.S., including New York, Los Angeles (LA), Seattle, San Francisco, and Honolulu, were also transferred to Air Premia, a LCC. Currently, seven Japanese routes (Seoul-Osaka, Sapporo, Nagoya, Fukuoka, Busan-Osaka, Sapporo, Fukuoka), which have many overlapping routes with Asiana, have also decided to be additionally given to LCCs.

On the 11th, Korean Air will participate in Asiana’s third-party allocation paid-in capital increase and acquire a 63.88% stake. It plans to invest KRW 800 billion out of the total acquisition price of KRW 1.5 trillion, excluding the down payment and interim payment. The final merger with Asiana will be completed when the acquisition price is paid. It is expected that Asiana will be a subsidiary for the next two years and cabin crew exchanges will begin. After that, personnel exchanges for management and maintenance positions will continue. Once the integration is complete, Asiana’s name will be reorganized into a single brand, “Korean Air.” Previously, Korean Air announced that it would launch an integrated brand in October 2026.

With the merger of the only full-service carriers (FSCs) in Korea, Korean Air will be reborn as a ‘mega carrier’ airline ranked in the top 10 in the world. As of last year, Korean Air had sales of KRW 16.1 trillion, and Asiana had sales of KRW 7.6 trillion. In this case, the combined Korean Air’s sales will exceed KRW 24 trillion. The LCC industry is also bound to change. This is because Asiana’s LCC subsidiaries Air Busan and Air Seoul will be absorbed into Korean Air’s LCC subsidiary Jin Air. The combined sales of the three LCCs last year were approximately KRW 2.5 trillion, exceeding the industry leader Jeju Air (KRW 1.7 trillion).

In terms of aircraft fleet status, Korean Air will increase its fleet to 136 passenger aircraft and 23 cargo aircraft, Asiana will increase its fleet to 68 passenger aircraft, Jin Air to 30 aircraft, Air Busan to 21 aircraft, and Air Seoul to 6 aircraft, for a total of 284 aircraft.

Son Wontae (tellme@fntimes.com)