Aekyung emerges as favorite to buy Asiana

Aekyung Group has once again surfaced as a potential bidder to acquire the cash-strapped Asiana Airlines after banking sources said Tuesday that Aekyung is about to partner with Samsung Securities for the planned merger and acquisition.

Aekyung, which already owns Jeju Air, has been mentioned as a likely bidder for Asiana Airlines ever since Kumho Asiana Group announced in April that it will sell the airline. Attention eventually shifted to other possible bidders like SK Group, Lotte Group and Hanwha Group due to their larger liquidity. Now that those groups have publicly denied they are interested, the attention has returned to Aekyung.

According to industry sources from investment banks, AK Holdings picked Samsung Securities as the deal manager, and is about to sign a contract.

AK Holdings refused to confirm the acquisition or partnership with Samsung Securities, but did not eliminate the possibility it would take over Asiana.

“Nothing about the acquisition has been determined as of now,” said a spokesperson for AK Holdings. “But we have Jeju Air as an affiliate and, therefore, have been observing the situation with interest from the very beginning.”

Aekyung entered the airline business in 2005 with Jeju Air. The low-cost carrier has grown to become Korea’s biggest budget carrier in terms of sales. It posted 1.26 trillion won ($1.05 billion) in sales last year and 101.2 billion won in operating profit.

Although Aekyung is well known for its beauty products like its Age 20s foundation packs and daily supply brands such as Kerasys, it is not as big as major conglomerates.

It was only earlier this month that the Fair Trade Commission designated Aekyung as a company that is subject to corporate disclosure. Companies with more than 5 trillion won in assets are subject to corporate disclosure. AK Holdings now has a total of 5.2 trillion won in assets.

But taking over Asiana Airlines could prove to be a stretch for the group financially.

“AK Holdings is doing very well with the operation of Jeju Air,” said analyst Kim Ik-sang from BNK Securities. “Acquiring Asiana Airlines could complete AK’s airline business since taking over a full-service carrier means that AK could operate flights to Europe and America. But whether AK can afford 2 to 3 trillion won for the takeover remains a major issue.”

Acquiring Asiana Airlines could also mean taking over its low-budget carriers, Air Busan and Air Seoul.

Despite their denials, other conglomerates could still take part in the bidding.

BY JIN MIN-JI [jin.minji@joongang.co.kr]