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Aekyung to build biggest airline with Asiana stake

Sept 12,2019
Aekyung Group intends to build Korea’s largest airline if it is able to take control of Asiana Airlines.

The boast comes a day after Credit Suisse, which has been hired to sell Kumho Industrial’s 31-percent stake in the carrier, selected four shortlisted bidders for the shares.

The candidates are: Aekyung Group; a consortium of HDC Hyundai Development and Mirae Asset Daewoo; a consortium of Korea Corporate Governance Improvement (KCGI) and BankerStreet, a private equity group; and Stonebridge Capital, another private equity group.

Aekyung already operates Jeju Air, the country’s largest budget airline, and says it is the only bidder with actual experience in air transportation.

“When Aekyung Group acquires Asiana Airlines, it can jointly operate some 160 airplanes […] and become the largest aviation group in the country in terms of market share in the passenger air transport business,” Aekyung said in statement.

Currently, Korean Air together with Jin Air, which is 60-percent owned by Hanjin Kal, has the largest air-passenger market share. It is followed by the combined fleet of Asiana Airlines, Air Busan and Air Seoul, according to Aekyung. Jeju Air is third.

Aekyung also added that it is currently negotiating with “a number of reliable financial investors” to fund the acquisition. Analysts have said the HDC Hyundai Development and Mirae Asset Daewoo consortium has an upper hand in the acquisition in terms of financial capabilities.

With the absence of big name conglomerates like SK, GS or Hanwha, the sale of the Asiana Airlines stake seems to be losing steam, but industry insiders say these conglomerates can still participate in the main bid, likely the end of October.

“We have never said we considered the acquisition of the airline,” an SK spokesperson said. “If you ask if there is any chance at all, we don’t know apart from the fact that such a plan has not been considered so far.”

Shortlisted candidates are able to conduct due diligence on Asiana Airlines for the next six to eight weeks.

As financial investors, like private equity funds, cannot participate in the main bid by themselves without a strategic investor, industry insiders speculate that some of the conglomerates could later turn out to be strategic investors in partnership with some of the shortlisted consortia.

On Wednesday, shares of Asiana Airlines rose 2.22 percent to close at 5,520 won ($4.64). Shares of Jeju Air, 56.94 percent owned by Aekyung’s AK Holdings, rose 2.93 percent to 24,600 won, while HDC Hyundai Development shares dropped by 0.31 percent to 32,500 won.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]


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