Korean Air Confirms Official Acquisition of Asiana Airlines

Minjun Son

File Photo: Yonhap News

Korean Air’s acquisition of Asiana Airlines was officially announced by the government. The government decided to invest 800 billion won to Korean Air through the Industrial Bank, which was explained as an inevitable choice to overcome the crisis in the aviation industry brought about by Corona 19. Even with the government’s budget of more than 3 trillion won in Asiana, the sale was not smooth, so they had no choice but to consolidate the number 1 and 2 airlines in Korea.

As Korean Air is also receiving government support, there is controversy over whether it is appropriate as a takeover. However, the government decided that it would be better to merge into one than to support two difficult airlines.

The government’s money for the integration of the two airlines is 800 billion won. When Korea Development Bank invests this money in Hanjin Kal, the parent company of Korean Air, it will be used to secure a stake in Asiana through Korean Air. Korean Air also secured additional funds through a paid-in capital increase and invested KRW 1.8 trillion in Asiana Airlines. The government plans to play a role in monitoring and checking the management of Korean Air with the stake in Hanjin Kal, which is at the top of the integrated airline’s governance structure.

Together, the two airlines make it the world’s 7th largest super-large airline. With more than 240 planes alone, it ranks 3rd in international cargo traffic and 10th in number of people. The assets are also close to 40 trillion won. Based on this scale, the government evaluated that it could improve profitability through economical route operation and cost reduction.

Low-cost airlines such as Jin Air, Air Busan, and Air Seoul, which are subsidiaries of the two companies, will also be phased out. The consolidation of the two airlines is expected to be completed by the second half of next year as soon as possible after obtaining approval for a merger by the FTC

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