Korean Air Lines and Asiana Airlines are set to make a critical decision regarding the sale of Asiana’s cargo business during an upcoming board meeting on Monday. This decision could have a direct impact on the European antitrust regulators’ stance on permitting the merger of these two airlines.
Local media reports suggest that Korean Air is preparing an agenda to discuss the sale of Asiana’s cargo business and will outline measures to ensure employment stability during the board meeting scheduled for Monday morning.
Asiana Airlines, in turn, is convening a meeting at 2 p.m. on the same day to deliberate on whether to endorse Korean Air’s proposed plan. The sale of Asiana’s cargo business has emerged as a pivotal factor in the merger proceedings, as the European Commission (EC) has specifically requested Korean Air Lines to present formal remedies to address concerns related to the merger potentially dominating passenger and cargo flights connecting Korea to various European cities.
Korean Air has a deadline until the end of October to submit these remedies, making the forthcoming board meeting the final opportunity to discuss the potential sale of Asiana’s cargo business.
Asiana Airlines currently operates a fleet of 79 aircraft, including 11 dedicated to cargo operations, providing transportation of goods to 25 cities across 12 countries worldwide.
It is worth noting that in 2021, during the COVID-19 pandemic, the cargo business proved to be a significant lifeline for Asiana Airlines, contributing a substantial 3.15 trillion won (approximately $2.3 billion), which accounted for a substantial 77 percent of its total annual sales. In 2022, Asiana’s cargo business continued to perform well, with cargo sales amounting to 3 trillion won, surpassing half of its total sales for the year, which stood at 5.63 trillion won. When combined with Korean Air’s cargo business revenue of 7.72 trillion won from the previous year, the merger could result in an annual cargo revenue exceeding 10 trillion won.
According to data from the Korea Civil Aviation Association, these two carriers collectively control 60 percent of the total cargo volume in Europe.
Korean Air is currently awaiting approval not only from the European Commission but also from the U.S. Department of Justice and Japanese authorities. It is crucial to note that the success of the merger hinges on securing approval from all three of these jurisdictions.
Source: Korea Joongang Daily