Korean Air has delayed its acquisition of Asiana Airlines to 2024. Indeed, there are several obstacles in the way, including monopoly issues and the future operations of the two airlines’ low-cost subsidiaries Jin Air, Air Busan and Air Seoul.
Korean Air submitted a post-merger integration plan to Korea Development Bank (KDB), proposing to acquire Asiana by 2022 and fully merge by 2024. Korean Air initially planned to complete the merger by next year. Under the plan, the flag carrier will complete asset acquisition of the smaller player by the end of next year and run as separate units for two years before fully uniting. During the transition period, the mileages of the two airlines will be evaluated to decide the conversion ratio. Overlapping routes, staffing and businesses will be streamlined and rationalised.
According to sources from the newspaper The Korea Times, the delay comes as Korean Air struggles to obtain approval from nine antitrust authorities in countries serviced by the carrier: only Turkey has approved the deal so far, while seven other countries, including Korea, the United States, China, Japan, Vietnam, Taiwan and Thailand, and the European Union have not given their approval.
Major airlines and carriers are wary of the merger since it will form the world’s seventh-largest carrier, which will further increase competition in an already saturated market.
Furthermore, many U.S. routes are expected to undergo changes as Asiana Airlines is under the Star Alliance and will become part of Korean Air and the SkyTeam alliance under the deal, which will prevent partnerships with United Airlines on several U.S. routes. There is a high possibility that U.S. antitrust authorities will take UA’s situation into consideration.
Sources: The Korea Times and Pulse
UPDATE
After the publication of our article, we received the following comment from a spokesperson for Korean Air:
For your clarification, Korean Air has no outstanding issues with the acquisition and, so far, the integration is going as we expected.
The post-merger plan has been submitted to the Korea Development Bank (KDB), and we secured enough liquidity to finalize the acquisition through raising the necessary capital.
The acquisition can be finalized upon the merger approval from relevant countries, and we readjusted our timeline just in case some countries require more time to review and approve.
The business integration plan involves every aspect of our operation and 2024 is when we are estimating to finalize all aspects of the deal.
Therefore, it is not correct to say that our plan has been delayed as stated in your article.
