Seoul, South Korea: Korean Air, South Korea’s largest airline, has officially completed the acquisition of its local rival, Asiana Airlines. This marks the end of a years-long process to integrate Asiana as a subsidiary. The deal strengthens Korean Air’s position in the global aviation market and brings significant changes to South Korea’s airline industry.
Details of the Acquisition
The merger deal cost Korean Air a total of 1.8 trillion won. As part of the process, Korean Air spent 1.5 trillion won (approximately $1.04 billion) to acquire 131.57 million new shares issued by Asiana Airlines. This accounts for 63.88% of Asiana’s total shares, making Korean Air the majority shareholder.
The initial steps toward this merger began in November 2020, when Korean Air announced its plans to acquire the financially struggling Asiana. At the time, Korean Air invested 300 billion won in purchasing Asiana’s perpetual convertible bonds.
Securing Global Approvals
Korean Air finalized the share acquisition on Wednesday after obtaining approval from antitrust regulators in 14 countries and regions. These included the European Union, which imposed conditions to address competition concerns.
To secure these approvals, Korean Air made several concessions. One major condition was the sale of Asiana’s cargo business division. Additionally, Korean Air agreed to transfer certain flight routes to other carriers to maintain fair competition in the market.
Post-Merger Integration Plan
Over the next two years, Korean Air will carry out a post-merger integration (PMI) process to fully absorb Asiana Airlines. During this period, Asiana will operate as a subsidiary before being completely merged into Korean Air.
The integration plan also includes restructuring Asiana’s low-cost carriers. Jin Air, Korean Air’s budget airline unit, will take over Asiana’s low-cost subsidiaries, Air Seoul and Air Busan. Once the PMI process is complete, Asiana, Air Seoul, and Air Busan will cease to exist as separate entities.
Future Business Plans
The merged airline aims to maximize efficiency and create new opportunities. Korean Air plans to diversify time slots on overlapping routes and introduce new destinations. Despite the integration, the company has assured that it will retain its current workforce after the PMI process.
Korean Air expects the merger to significantly enhance its global standing. The combined airline is projected to become the world’s 12th-largest carrier based on revenue passenger kilometers, a measure of passenger traffic.
Mileage Conversion and Shareholder Meeting
As part of the merger process, Korean Air will submit a plan to the Fair Trade Commission (FTC) by June 2025 for reviewing the conversion ratio of mileage points between the two airlines. This will ensure a smooth transition for frequent flyers of both carriers.
Additionally, Asiana Airlines has scheduled an extraordinary shareholders meeting on January 16, 2025. During this meeting, new board directors nominated by Korean Air will be appointed.
FTC’s Corrective Measures
The Fair Trade Commission has imposed several conditions to address competition concerns related to the merger. One key requirement is that the two airlines must maintain at least 90% of the seating capacity offered before the merger on key routes.
Additionally, the airlines must ensure that seat availability on 40 specific routes does not fall below 90% of their 2019 levels. These measures aim to prevent reduced competition and ensure that passengers continue to have access to adequate flight options.
Impact on South Korea’s Aviation Industry
The Korean Air-Asiana merger is a significant development for South Korea’s aviation industry. By combining resources and expertise, the merged airline is expected to strengthen its global competitiveness.
The deal also brings challenges, including meeting the conditions set by regulators and successfully integrating operations without disrupting services. However, the company is optimistic about the future, highlighting plans to expand its network and enhance passenger experience.
New Chapter for Korean Air
With the acquisition of Asiana Airlines, Korean Air has entered a new phase of growth and transformation. The integration is expected to create a stronger, more competitive airline capable of thriving in the global market.
As the PMI process unfolds over the next two years, passengers and industry stakeholders will be closely watching the changes and opportunities this merger brings. For now, Korean Air is set to soar higher than ever.
