Merger Finalization Steps?... Korean Air Highlights Asiana Acquisition in Promotional Video

Mentioned on Official YouTube Channel
"Achieving Economies of Scale Through Merger"
Unusual Given Reserved Approach
Final European Approval Imminent... US Authorities' Judgment Also Seems Optimistic

Korean Air posted news about its merger with Asiana Airlines on its official YouTube channel. The video mentioned major merger cases among global airlines and introduced the current status of the ongoing merger with Asiana. It is considered unusual that Korean Air, which had been reserved about discussing the merger progress, announced it through its official channel. This has led to interpretations that the merger is practically imminent according to internal assessments.

According to industry sources on the 18th, Korean Air uploaded content titled “2024 Airline Industry Stories Explored on a World Map” on its official YouTube channel ‘Kaltok’ the day before. The content covered major merger cases of global airlines and concluded with news about the Korean Air-Asiana merger. Korean Air explained that this merger will realize economies of scale, serve as a starting point to drive future growth of Korea’s aviation industry, and establish global competitiveness.

‘Kaltok’ mainly features soft content such as travel destinations and aircraft usage guides. This is the first time management-related news like the Asiana merger has appeared. The industry responded that this contrasts with the previously cautious atmosphere. Korean Air had refrained from directly mentioning the merger with Asiana. An industry insider commented, “The fact that they addressed airline industry restructuring itself shows confidence that the merger is nearing completion.”

The atmosphere inside and outside the company is that the merger between Korean Air and Asiana Airlines has reached its final stages. It is expected to receive final approval for the corporate combination from the European Commission (EC) early next month. All conditional approval requirements set by the EC have already been resolved. T’way Air started operating the last European route transferred from Korean Air this month, the Frankfurt route in Germany. The other requirement, the sale of Asiana Airlines’ cargo division, is also in its final stages.

The last remaining judgment from the U.S. Department of Justice (DOJ) is also considered practically complete. Initially, the U.S. government was reported to have a negative stance on the merger (M&A). However, a change in atmosphere has been detected recently, such as the approval of Alaska Airlines’ acquisition of Hawaiian Airlines. Unlike Japan and Europe, which clearly announce corporate combination approval decisions, the U.S. government considers approval granted if no separate lawsuits or objections are filed after receiving the corporate combination review application. The industry expects that the U.S. government will not raise objections once the EC gives final approval. The conclusion is expected around next month.

Once this process is completed, Korean Air will participate in Asiana Airlines’ 1.5 trillion KRW third-party allotment capital increase and become the largest shareholder with a 63.9% stake. It will transform into a ‘mega airline’ ranked within the top 10 worldwide based on passenger transport performance. After the integration begins in earnest, Asiana Airlines is expected to be maintained for about two years while operational efficiency between the two companies is improved.

Restructuring among low-cost carriers (LCCs) is also expected to occur in succession. The merger of Jin Air, affiliated with Korean Air, and Air Seoul and Air Busan, affiliated with Asiana Airlines, is likely to proceed. If Jin Air absorbs Air Seoul and Air Busan, the domestic LCC landscape will also change. An LCC industry official said, “The industry landscape will change significantly.”