News
Korean Air set on rapid approval for takeover of Asiana
December 4th 2020
Korean Air (KAL) president, Woo Kee-hong, said this week the carrier hoped to complete the Asiana Airlines buyout next year, after due diligence and the formation of a post-merger integration plan. Read More »
The 1.8 trillion won (US$1.6 billion) transaction between South Korea's number one and number two airline groups was proposed in November. It has several hurdles to surmount to complete the merger, including antitrust approval at home and in a number of overseas jurisdictions.
KAL will take three months to conduct due diligence on Asiana, canvassing topics such as the Star Alliance member's cost structure, contracts and fleet. The proposed schedule is a completed post-merger integration plan by March 17, 2021. Applications to antitrust authorities in China, the European Union, Japan and the U.S. would be filed by January 17, KAL said.
"There seems to be no problems in obtaining approval from overseas for the merger of the two airlines given bigger merger deals went smoothly in the past," Woo said, the Yonhap News Agency reported.
The South Korea government backs the proposed deal and state-run Korea Development Bank (KDB) is contributing to the transaction, but there are pockets of resistance to the consolidation from equity fund, Korea Corporate Governance Improvement (KCGI) and other investors, which so far have come to nothing.
Asiana's most recent financial accounts, published in November, showed the company had net profit of 2.3 billion won for the quarter to September 30, a return to the black from a net loss of 232.5 billion won for the prior corresponding period. However, it had an operating loss of 5.8 billion won for the three months. Revenue fell 53.2%, to 731 billion won.
Combined, KAL and Asiana would create the biggest airline in the Asia-Pacific, based on 2019 passenger volumes, and the 10th largest carrier in the world, consultancy CAPA said.
