Korean Air Completes Acquisition of Asiana Airlines

In a significant milestone for South Korea's aviation industry, Korean Air has completed its long-awaited acquisition of Asiana Airline, bringing to a close a complex transaction that began in November 2020, aviationsourcenews.com reports. The strategic merger represents a transformative moment for the country's air transport sector, promising to reshape the competitive landscape of international aviation.

On December 12, 2024, Korean Air secured a majority stake of 63.88% in Asiana Airlines through the purchase of 131,578,947 newly issued shares. The financial commitment for this acquisition was substantial, with a total investment of 1.5 trillion won (1 won = 0.00070 dollars). The investment includes a recent payment of 800 billion won, which complements previous allocations of 300 billion won and an interim payment of 400 billion won.

The origins of the merger lie in the difficult economic conditions facing the aviation industry, especially during the Covid-19 pandemic. Asiana Airlines has been experiencing significant financial difficulties recently, and its acquisition by Korean Air is a lifeline for the carrier, the source said.

The deal was initially announced in November 2020, but required extensive regulatory approvals and complex financial negotiations. In particular, the European Union (EU) was particularly strict in its assessment of the transaction. The EU authority expressed concerns about potential monopolies in the cargo segment and on certain European routes. As a result, to gain EU approval, Korean Air had to make concessions, such as selling Asiana's cargo division and dropping redundant routes.

In the US, the Department of Justice was the final authority to approve the merger, but imposed certain conditions related to competition and market dominance.

Finding a buyer for Asiana's cargo division proved challenging, as most local low-cost carriers lacked the infrastructure and expertise to operate a large-scale cargo business. Air Incheon was recently named as the approved buyer of Asiana Airlines' cargo division.

• Two-year integration plan

Korean Air has outlined an ambitious two-year integration plan focused on several strategic objectives, according to the source. The main objectives include optimizing flight networks by rationalizing routes with overlapping services and expanding service to new international destinations. The company will make substantial investments in safety and operational infrastructure. More broadly, Korean Air will seek to enhance Incheon Airport's capabilities as a global hub.

The merger will not result in layoffs. Instead, Korean Air plans to realize organizational synergies through internal reallocations and organic growth based on business expansion.

An extraordinary shareholders' meeting, scheduled for January 16, will facilitate the appointment of new directors to the board, nominated by Korean Air.