Established in 2012 as Korea's First Cargo-Dedicated Airline
Last Year's Revenue 70.7 Billion KRW, Operating Loss 15.6 Billion KRW
With 1.7 Trillion KRW Revenue, Joins Asiana to Become Korea's 2nd Largest Airline
Air Incheon has become the new owner of Asiana Airlines' cargo division, breaking through competition from other low-cost carriers (LCCs) such as Air Premia and Eastar Jet. With its revenue scale soaring from the 70 billion won range to over 1 trillion won, it has established itself as the second-largest cargo-specialized airline in South Korea.
According to industry sources on the 17th, Korean Air held a board meeting that day and selected Air Incheon as the preferred bidder for the sale of Asiana Airlines' cargo division.
Air Incheon, established in January 2012, is South Korea's first cargo transportation specialized airline. It is also the only cargo-specialized airline in the country. Its main focus is on medium- and short-haul routes between China and Southeast Asia. After introducing the Boeing 737-400SF (HL8271) aircraft in 2013, it began operations with charter flights to Yuzhno-Sakhalinsk (UUS), Russia. Since then, it has steadily expanded its routes and fleet, and as of the end of last year, it operates four Boeing 737-800SF aircraft serving eight destinations.
The major shareholder is the private equity firm Socios PE. Socios Aviation Fund, managed by this firm, holds an 80.3% stake. Following are Park Yong-kwang, CEO of Air Incheon (19.4%), and Incheon City Hall (0.3%) as key shareholders. Socios played a significant role in acquiring Asiana Airlines' cargo division. Socios PE brought in Inhwa Precision, an LP of Socios Aviation Fund, as a strategic investor (SI). Additionally, they formed a consortium with Korea Investment Partners as financial investors (FI) and arranged acquisition financing with Shinhan Investment Corp. and Korea Investment & Securities.
It is evaluated that Air Incheon secured acquisition funds early and stably, surpassing Eastar Jet and Air Premia. Although Air Premia enlisted MBK Partners as an ally, the Ministry of Land, Infrastructure and Transport blocked the deal due to foreign shareholders such as Dial Capital in MBK Partners' fund. Moreover, Air Incheon received high marks for its consistent cargo business operations and its ability to maintain stable operations post-acquisition. Despite little difference in bid prices, these qualitative evaluations reportedly became the decisive factor.
Although Air Incheon is South Korea's first cargo-specialized airline, its scale was not large. Last year, it recorded sales of 70.7 billion won and an operating loss of 15.6 billion won. However, by acquiring Asiana Airlines' cargo division, which holds a 19.4% market share (as of Q1) and ranks second, its business scale will expand significantly. Asiana Airlines' cargo division posted sales of 1.6071 trillion won (including belly cargo) and an operating profit of 70 billion won. It operates a total of 11 aircraft (8 owned and 3 leased). Although contracts with shippers may not continue as is, if Air Incheon absorbs Asiana Airlines' cargo division, its revenue scale is expected to surge to at least over 1 trillion won. Its flight routes are also likely to expand to long-haul routes such as the United States and Europe.
An industry insider said, "While the preference of shippers for large, reliable airlines remains a challenge to overcome, the volume of cargo that can be handled will physically increase significantly immediately. If Air Incheon absorbs Asiana Airlines' cargo division and strengthens its fundamentals, stable cash generation will become possible."
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