Korean Air Board Approves Cargo Division Sale
T'way Air's Europe Launch Schedule Finalized, EU Review Nears Completion
Only US Authorities' Approval Remains... Acquisition Expected by Year-End
Air Incheon, the preferred bidder for the acquisition of Asiana Airlines' cargo division, will sign a Memorandum of Understanding (MOU) with Korean Air. With the European Commission (EC) resolving the cargo business monopoly concerns as a condition for approving the Korean Air-Asiana merger, the merger has now passed the critical final hurdle.
According to industry sources on the 17th, Korean Air will hold a board meeting this morning to give final approval for the sale of Asiana Airlines' cargo division and then sign an MOU with Air Incheon, the preferred bidder. Air Incheon will conduct detailed due diligence for about two weeks and is expected to sign a Stock Purchase Agreement (SPA) with Korean Air by the end of next month.
With the EC's approval of the merger finalized, the four-year-long merger process between the two companies has entered its final phase. This leaves only the decision from the United States among the 14 countries under review. Currently, Korean Air is submitting additional documents to the U.S. Department of Justice (DOJ), the competition authority, and is negotiating measures to address competition concerns. The DOJ's review process concludes with a termination of the investigation rather than an approval or denial. If no lawsuit is filed following the termination, the merger is considered approved.
The date for the termination notice is undecided, but the industry expects the process to proceed relatively smoothly. The European authorities have thoroughly addressed the major monopoly issues, and Korean Air has effectively implemented the required measures. Unlike the European Union, the U.S. does not strictly regulate the number of traffic rights at the national level due to the Open Skies Agreement with South Korea. There is no need to strictly allocate competitive routes within Europe, as in the case of T'way Air. Therefore, the industry expects the DOJ to complete the process after reviewing the sale of Asiana Airlines' cargo division. An aviation industry official explained, "Since the EU has handled the major issues directly, the U.S. seems to be taking the stance of deciding only after confirming that the measures proposed by the EU are properly implemented."
Once the U.S. authorities complete their review, Korean Air plans to acquire Asiana Airlines' shares by the end of this year as publicly announced. Earlier in February, Korean Air announced it would invest 1.5 trillion won through a third-party allotment to acquire 131,578,947 shares of Asiana Airlines (a 63.9% stake) by December 20 of this year. Through this, Korean Air plans to incorporate Asiana Airlines as a subsidiary and merge the two airlines into a single integrated carrier within two years. Upon completion of the merger, Korean Air is expected to become one of the world's top 10 largest airlines.
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