EU to green light Korean Air’s acquisition of Asiana Airlines, report says

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EU to green light Korean Air’s acquisition of Asiana Airlines, report says

Published: 14 Jan. 2024, 15:34 Updated: 14 Jan. 2024, 18:08

LEE JAE-LIM
[email protected]

An Asiana Airlines airplane takes off with Korean Air airplanes in the background at the Incheon International Airport on Sunday. [NEWS1]

European Union (EU) antitrust regulator is expected to approve Korean Air’s acquisition of its smaller rival, Asiana Airlines, before its deadline of Feb. 14, Reuters reported on Friday.

Official approval from the European Commission (EC), the executive branch of the EU, is to be given by the end of this month or next month, while final decisions from U.S. and Japanese competition authorities are still pending.

Reuters cited two anonymous sources with direct knowledge of the matter when reporting that the EC’s approval was given based on a set of remedies set by Korean Air to sell Asiana Airlines’ cargo arm and divest routes to four European cities in Barcelona, Frankfurt, Paris and Rome.

The EC is currently at the stage of drafting the evaluation document for the merger, according to a source cited by the Yonhap News Agency.

Once the documents are drafted, 27 member states will gather to give out their final votes at a meeting.

Local media outlets project that it will take a few more weeks for the EU to outline an official approval considering that it initially set a deadline of Feb. 14 to approve the deal last month.

“We have not received any official reports from the European Commission yet, but we will give our best until the final approval is granted,” said a Korean Air spokesperson.

Korea’s top airline has been pursuing the merger with the country’s second-largest airline for 1.8 trillion won ($1.37 billion) since November 2020, having gained approval from 11 out of 14 countries involved in the process — except for EU, U.S. and Japanese regulators.

The merger process appeared to be proceeding smoothly until May 2023 when the EC released an evaluation report, expressing concerns that the merger could impede competition for passenger and cargo transport businesses operating between the EU and Korea.

To win EC’s approval, Korean Air decided to give up the highly profitable Asiana Airlines cargo business, which accounts for 20 to 30 percent of its total income, even accounting for more than 70 percent during the peak of the Covid-19 pandemic when passenger flights were severely limited. The business unit also plays a critical role in transporting high-value products such as semiconductors and batteries from Korea.

Following intense debate, Asiana Airlines’ board approved the selloff in November and Korean Air filed its remedy plan, including the post-merger sale, last month.

Korean airlines such as Air Premia, Eastar Jet, Air Incheon and Jeju Air have submitted their letters of intent to acquire Asiana Airlines’ cargo arm.

Budget airline T’way Air is the likely candidate to operate the divested routes for the four European cities given up by the Korean Air, according to local media outlets.

BY LEE JAE-LIM [[email protected]]