The merger proposal was first announced in November 2020.
Korean Air said it expects to complete the acquisition of Asiana Airlines this year, as it acknowledged that the process had “taken much longer than expected”.
But Korean Air’s top boss is aiming to finalize it this year. Although several markets around the world have approved the deal, three key markets – Europe, the US, and Japan – are yet to give their nod.
Aiming for the acquisition in 2024
Korean Air Chairman and CEO Cho Won-tae has said that the company aims to finalize the merger process with Asiana Airlines this year. In his New Year’s message to employees, he noted that it has taken longer than expected to get everyone on board and that the company “will complete the acquisition of Asiana Airlines in 2024.”
The two major airlines of South Korea are hoping to become one and have even managed to convince the antitrust authorities of several markets, including Australia and China, but a few significant markets are still assessing the deal before they can come to a decision.
The integrated airline will “be a tremendous growth engine for us in the long run”, Cho added, urging employees to “work together” in its launch. “Korean Air will be poised to stand shoulder to shoulder with global leading airlines. The merger will optimize our network and allow us to operate to new destinations, so that we may offer customers more choices.” Last month, European Union competition regulators set a February deadline to review Korean Air’s proposed acquisition of Asiana Airlines.
The two airlines last year gained board approval to sell the cargo business of Asiana Airlines to offset concerns about the market share the combined entity would have on the Korea-Europe trade lane. While the acquisition has gained approvals from several regulators, including in Singapore, the UK, and China, it has faltered in major jurisdictions such as the EU, USA, and Japan. The drawn-out process was nearly derailed in late October when the Asiana board failed to decide whether to divest its cargo unit, which was a crucial factor in gaining EU approvals for the merger. Days later, Asiana greenlit the divestment of its cargo division, paving the way for regulatory approvals, and setting the acquisition process back on track. In his New Year’s message, Cho also warns of “a rocky road” in the near term, flagging challenges such as geopolitical risk, supply chain disruptions, and a sluggish economic outlook.
He stated: “In contrast to the difficult times we have faced, our valued passengers have rekindled their travel plans, and airports buzz with activity. While we celebrate our victory over a significant crisis, a rocky road remains ahead.” He added that its cargo business – once the “lucrative” financial lifeline amid the pandemic – is seeing a slowdown, while the passenger travel business will see “intensified industry competition”. To this end, Cho said the airline must “consistently cultivate and refine our strengths”. In his message, Cho also anticipated sustained geopolitical risks, global supply chain disruptions, economic slowdowns, and prolonged inflation to persist through 2024. Further, he expected intensified industry competition in regaining market share and a slowdown of the lucrative cargo business.
