South Korea’s main airlines agree on plan to push merger through
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The plan includes selling Asiana’s cargo business to another South Korean carrier, removing the main obstacle to the merger.
PHOTO: REUTERS
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SEOUL – Asiana Airlines agreed to a plan on merging with Korean Air after holding long-running talks to overcome concerns about how their combination might impact competition on European routes.
The plan, signed off at a board meeting on Thursday, includes selling Asiana’s cargo business to another South Korean carrier, removing the main obstacle to the merger.
Others will also be allowed to use the airlines’ Seoul to Paris, Frankfurt, Rome and Barcelona routes.
State-run Korea Development Bank (KDB) has injected 3.6 trillion won (S$3.7 billion) of taxpayers’ money into trying to salvage debt-ridden Asiana.
When outlining the merger in 2020, KDB said it would give South Korea a single, competitive national airline amid restructuring and consolidation in the industry.
European regulators feared that if Korean Air took over Asiana, a move first proposed in 2020, it would threaten competition on air freight services to and from Europe, as well as passengers routes.
Three Asiana board members voted in favour of the plan, one opposed it and another abstained, a spokeswoman at Asiana told Bloomberg News.
Korean Air said it will submit the new proposals to the European authorities and await a decision.
The airline aims to win approval by the end of January.
It is also awaiting the nod from the United States and Japan.
The airline said it will talk with the US authorities and submit a proposal to Japan, with expectations of a decision in early 2024.
“While Korean Air continues its efforts to secure approval from the European Commission (EC), the airline will also communicate closely with the remaining regulatory bodies to finalise the approval process as quickly as possible,” a Korean Air spokesperson wrote in a text message to Bloomberg News.
Others such as China and Britain have already given the green light to the plan.
Korean Air said it will seek a buyer that guarantees Asiana’s cargo workers keep their jobs.
“Korean Air proposed alternative ways to ease competition concerns but the EC rejected all of them – the cargo business sale was the only option to propose for winning approval,” the spokesperson said.
Having surged in anticipation of an agreement being reached, Asiana’s shares slid on Thursday afternoon in Seoul, dropping 7.7 per cent as at 2.45pm. BLOOMBERG
