Korean Air Completes Acquisition of Asiana Airlines, Finalizes Integration as Subsidiary

SEOUL: Korean Air Co., South Korea's largest airline, has completed the acquisition of its local competitor Asiana Airlines Inc., incorporating it as a subsidiary in a significant move that concludes a complex, yearslong process. The transaction, valued at 1.8 trillion won, strengthens Korean Air's position in the global aviation market.According to Yonhap News Agency, Korean Air invested 1.5 trillion won (approximately US$1.04 billion) to acquire 131.57 million newly issued shares of Asiana, securing a 63.88 percent stake in the airline. This acquisition marks the culmination of efforts that began in November 2020, with Korean Air initially investing 300 billion won in Asiana's perpetual convertible bonds. The finalization of the deal follows the requisite approvals from antitrust regulators across 14 countries and regions, including the European Union.In obtaining these approvals, Korean Air agreed to certain concessions, such as divesting Asiana's cargo business and transferring specific routes to othe r airlines. Moving forward, Korean Air plans a two-year post-merger integration (PMI) process during which Asiana will be fully absorbed. Additionally, Korean Air's budget carrier unit, Jin Air Co., will integrate Asiana's low-cost subsidiaries, Air Seoul Inc. and Air Busan Co., effectively dissolving these entities upon completion of the PMI program.The company aims to enhance synergies by diversifying time slots on overlapping routes and introducing new destinations, while retaining the existing workforce post-PMI. Korean Air anticipates that the enlarged entity will become the 12th-largest airline globally by revenue passenger kilometer.Future plans include submitting a proposed conversion ratio for mileage points between Korean Air and Asiana to the Fair Trade Commission (FTC) for review by June next year. Asiana will also hold a shareholders meeting in January to appoint new board directors nominated by Korean Air.In conjunction with the acquisition, the FTC has mandated corrective measures to addr ess competition concerns, requiring that the combined carriers maintain at least 90 percent of pre-merger seating capacity on essential routes. Furthermore, seat availability on 40 routes must remain above 90 percent of 2019 levels to mitigate potential competition issues.