Selection Paves Way for Korean Air’s Regulatory Approval in Asiana Airlines Takeover
Air Incheon has been designated as the preferred bidder for the sale of Asiana Airlines’ cargo business, a critical step in Korean Air’s protracted acquisition of Asiana Airlines. This decision was confirmed at Korean Air’s board of directors meeting on June 17, as per a press release from the airline.
In April, Republic of Korea-based airlines Eastar Jet, Air Premia, and Air Incheon submitted bids to acquire the cargo business. However, Korean Air selected Air Incheon as the primary candidate, citing the company’s ability to complete the transaction, maintain and enhance the cargo business’s long-term competitiveness, and mobilize funds through a competent consortium.
The sale of Asiana Airlines’ cargo division, estimated at $219-$364 million, is a strategic move to secure regulatory approval for Korean Air’s acquisition of Asiana Airlines. The sale aims to address competition concerns raised by regulators.
Korean Air plans to finalize a framework agreement with Air Incheon in July, pending contract condition negotiations and a review by the European Commission.
“The preferred bidder was selected through a comprehensive evaluation of all factors crucial to the growth of the air cargo industry, a key national industry, while maintaining the existing competitive environment,” stated a Korean Air representative. “We are committed to quickly finalizing the sales process through flexible negotiations and completing the acquisition of Asiana Airlines.”
Founded in 2012 and based at Incheon International Airport, Air Incheon is the Republic of Korea’s sole all-cargo airline. While its operations primarily focus on Asia, the acquisition of Asiana Airlines’ long-haul network to the Americas and Europe and its fleet of larger cargo aircraft are expected to bolster Air Incheon’s competitiveness.
Korean Air announced its intention to acquire Asiana Airlines in November 2020. However, the Covid-19 pandemic and subsequent disruptions delayed the proceedings. The plan also faced scrutiny from the European Commission, which expressed concerns that the merger would reduce competition between Europe and South Korea due to the carriers’ dominance in the long-haul market.
In response, Korean Air offered to sell Asiana Airlines’ cargo business in October 2023 to gain regulatory approval from Brussels. The European Union competition regulators set a February 2024 deadline to review the proposed acquisition after the airlines resubmitted their plans to EU antitrust regulators.
Korean Air anticipates completing the acquisition of Asiana Airlines within the year, aiming to finalize the long-awaited deal and navigate through regulatory challenges in multiple regions.
