Korean Air Set to Secure EU Approval for Asiana Airlines Acquisition

In a significant development in the global airline industry, Korean Air is on track to receive antitrust approval from the European Union (EU) for its acquisition of Asiana Airlines. The approval comes after both companies made commitments to address competition concerns, including the sale of Asiana’s cargo unit and the divestment of certain routes to four European cities, according to sources with direct knowledge of the matter.

This approval highlights the ongoing trend of consolidation within the airline sector, mirroring other major players seeking strategic partnerships. Lufthansa, for instance, is actively pursuing a 41% stake in Italy’s ITA Airways, while International Airlines Group (IAG), the parent company of British Airways and Iberia, aims to acquire the remaining 80% of Spain’s Air Europa that it does not already own, reported Reuters.

Korean Air, as South Korea’s largest carrier, expressed its intent to become the leading shareholder of the financially troubled Asiana Airlines with an investment of 1.8 trillion won ($1.37 billion) in late 2020. In November of the same year, Korean Air submitted a remedy offer to address potential antitrust concerns related to the acquisition.

Related: EU Regulators Pause Korean Air-Asiana Deal Probe

A notable aspect of the remedy offer is the proposed sale of Asiana’s cargo business, a departure from the typical remedies involving airport slots and access to frequent flyer programs. This innovative approach underscores the companies’ commitment to addressing regulatory concerns while facilitating the smooth completion of the acquisition.

To meet EU competition officials’ preferences, South Korean budget airline T’way Air is expected to step in as the buyer for Asiana’s cargo business. The officials reportedly emphasized a preference for an Asian, preferably Korean, rival to ensure a healthy competitive landscape post-transaction.

Source: Reuters