Following approval from the U.S. Department of Justice, Korean Air announced on 12 December the successful acquisition of Asiana Airlines with a 63.88% ownership stake. This successful merger brings immense opportunities to the airline group as well as influence to regional and international air traffic.
Long Awaited Acquisition
Korean Air’s ambition to acquire the debt-laden Asiana Airlines was first announced 4 years back in November 2020. In addition to the impact brought by the COVID-19 pandemic, Asiana Airlines was unable to recover from its financial crisis. As the European Commission approved the merger in November, the airline is now a subsidiary of the group. The total acquisition now stands at KRW 1.5 trillion.
According to a Reuters analysis of data, the new Korean Air group could account for over half of South Korea’s passenger capacity and rank 12th in international capacity. Following the acquisition, the group plans to complete the merger in two years. One plan includes the combination of low-cost carriers (Air Jeju and Air Seoul from Asiana Airlines) under the Jin Air brand.
Addressing Potential Competition Concerns in South Korea
While the acquisition boosts the group’s development, potential concerns of competition rose as South Korea’s two largest airlines are combined. This is one main reason for the lengthy acquisition process, with U.S. regulators fearing the group’s domination in the country, thus the delayed approval of the merger.
In response to the concern, South Korea’s transport ministry announced measures to support other local low-cost carriers, including Jeju Air and T’Way, offering additional rights for medium- and long-haul traffic. Read here for more details on Korean Air’s concession of business and flight routes.
Earlier in May 2024 Korean Air also transferred 4 European passenger airlines to T’Way, as well as leasing 5 A330-200 aircraft to the airline by the end of 2024. The EC and the U.S. Department of Justice approved the merger eventually as measures were implemented to support other local airlines which ensures competition within the region.
This merger is by record the longest M&A deal between airlines.
How do you think this merger would change the regional and international air traffic landscape? Share your thoughts in the comment section below!
