Korean Air Lines to acquire Hanjin KAL's stake in Jin Air
Korean Air Lines will acquire Hanjin KAL’s entire 54.91 percent stake in Jin Air for 604.8 billion won ($470 million), preparing to create one big budget carrier once it merges with Asiana Airlines.
The decision was made at Hanjin KAL's board of directors meeting Monday, and the transaction will happen as a block deal on Thursday.
Hanjin KAL owns 27.66 percent of Korean Air Lines and is the largest shareholder.
The carrier announced it acquired Jin Air to create synergy. Korean Air Lines announced last year it will create a mega budget carrier once it merges with Asiana Airlines. Asiana Airlines wholly owns Air Seoul and 42.8 percent of Air Busan, and combining the three budget carriers will allow them to efficiently operate routes they all fly to.
When the Fair Trade Commission evaluated the Korean Air Lines-Asiana Airlines merger for possible monopoly, it took affiliated carriers into consideration. Jin Air was also factored into the equation because it was a subsidiary of Hanjin KAL, parent of Korean Air Lines, so the upcoming acquisition won't affect the pending approval for the merger.
The merger currently needs to be approved by six other countries: the United States, Europe, Japan, China, Britain and Australia.
"The merger with Asiana Airlines is taking longer than expected, and Korean Air Lines is incorporating Jin Air as its subsidiary so the creation of a mega low cost carrier won't happen too late, after the tourism industry fully normalizes," said Choi Go-woon, analyst at Korea Investment & Securities. "Korean Air Lines acquired a stake in Jin Air before it got the final approval for the merger with Asiana Airlines, and this could mean it's confident in getting approval from overseas regulators."
BY LEE TAE-HEE [firstname.lastname@example.org]