After four years of back and forth, Korean Air has finally announced the completion of the transaction to purchase rival Asiana Airlines.
Announced in November 2020 amid the coronavirus pandemic, the merger between the two largest South Korean carriers ran into concerns about competition, which led Korean Air to offer several concessions in order to have the deal approved by regulatory agencies in various parts of the world.
The deal cost Korean around US$1.3 billion, which acquired a 63.88% stake in Asiana. The promise is that the merger will not result in layoffs, but the goal seems unlikely if the intention is to gain scale.
“The completion follows Korean Air’s payment of KRW 800 billion to Asiana Airlines on December 11, concluding the share purchase transaction. This brings the total investment through the third-party allotment capital increase to KRW 1.5 trillion, including the previously paid deposit of KRW 300 billion and interim payment of KRW 400 billion,” Korean said in a statement on December 12.
Korean and Asiana have a combined fleet of 238 aircraft, most of which are wide-bodies, including the Airbus A380 and Boeing 747, used on high-demand routes.
The final hurdle to completing the deal was cleared in early December when the European Union gave its approval for the merger on the condition that Korean cede routes to the mainland to rival T’way Air.
The integration of Asiana into Korean Air is expected to be completed by the end of 2026, the country’s largest carrier expects.
Asiana will hold an extraordinary meeting with its shareholders on January 16 to appoint the new board of directors.
