Sale of Asiana's cargo division to start Tuesday

Planes of Korean Air and Asiana Airlines are seen on the tarmac at Incheon International Airport, west of Seoul, on Nov. 2. [Yonhap]

The auction to sell the cargo business division of Asiana Airlines is set to begin Tuesday following the conditional approval by the European Union's antitrust regulator of Korean Air's merger plan, industry sources have said.

The European Commission (EC), the executive body of the EU, gave a conditional nod to the 1.8 trillion-won (US$1.4 billion) merger deal that was announced in 2020 after reviewing the plan submitted by Korean Air.

The national flag carrier proposed the sale of Asiana's cargo business and other remedial measures to win the EC's approval.

UBS, which is overseeing the deal, has recently distributed an information memorandum and non-disclosure agreements to companies interested in acquiring the cargo division, an airline official told Yonhap News Agency.

UBS is likely to deliver bid proposals to potential buyers by Wednesday as it wants them to submit their fundraising and post-acquisition business plans by the end of this month, the official said.

Potential buyers reportedly include low-cost carriers such as Jeju Air, Eastar Jet, which have both declined to comment, and Air Premia and cargo-focused Air Incheon, which each expressed interest in acquiring the cargo division.

Korean Air aims to select the buyer of the cargo business before October. The EC's approval of the selected buyer is also required to complete the merger plan.

Asiana's cargo division consists of 11 cargo planes, including three chartered ones, and earned 1.6 trillion won last year to account for 25 percent of the company's overall sales.

The division is estimated to go for a market price of 500 billion won to 700 billion won.

In 2021, Korean Air submitted documents to antitrust regulators in 14 countries to review its integration with Asiana, receiving approval from 13 including the conditional one from the EU, and is waiting for approval from the United States.

Yonhap