Korean Air says Asiana merger is on track

A Korean Air Lines plane takes off from Incheon International Airport. [KOREAN AIR LINES]

Korean Air Lines maintained that its acquisition of Asiana Airlines is going as planned in a statement Monday.

The airline said regulators in the United States, Europe, United Kingdom and Australia are asking it to ensure enough competition on routes it flies after the merger. To do so, it has been advised to encourage other carriers to fly routes the merged entity will have dominance in.

Final decisions haven't come from overseas regulators, but Korea's Fair Trade Commission said the merged entity will control all direct flights between Incheon and Los Angeles, New York and Barcelona.

The carrier has been contacting smaller airlines and encouraging them to fly certain routes. Many carriers are showing interest, the company said.

There has been speculation that the merger may fail because of the airlines' dominance of certain routes. The merger needs to be approved by six other countries: the United States, Europe, Japan, China, United Kingdom and Australia.

In the United States, review of the acquisition moved onto a stricter Second Request process in March. To successfully go through this process, Korean Air Lines said it plans to submit plans on how it will ensure competition, giving a specific name of the carrier that will fly routes it has dominance in.

The merger is at the pre-consultation stage in Europe. Korean Air Lines has been submitting documents since January last year so the official merger review process — which will come later — can be sped up.

In China, the merger application was canceled by Korean Air Lines last October and refiled in January. This was because mergers need to be approved by Chinese regulators within 270 days of submission of an application, and a decision wasn’t expected within the time frame.

The company said refiling merger applications isn’t unusual in China. It was done for SK hynix’s acquisition of Intel’s NAND flash memory chip business, which received Chinese approval last December.

Regulators in Japan, the United Kingdom and Australia are all reviewing the merger. Korean Air Lines says it has been submitting all necessary documents.

“There is a strong tendency to prioritize local companies’ interests when regulators review global merger and acquisition deals," read the statement from Korean Air Lines. "Although we are proceeding slowly, we believe we are working towards a positive conclusion.”

“Korean Air Lines will cooperate with requests of regulators abroad to get approval and carry out the acquisition of Asiana Airlines.”

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]