Korean Air finalized its long-anticipated acquisition of Asiana Airlines, securing a 63.88% stake in the company, thereby making Asiana a subsidiary. This acquisition, which has been in discussion since November 2020, marks a significant consolidation within South Korea's aviation sector. The deal, valued at around $1.6 billion, was approved by various regulatory bodies, including the European Union, after Korean Air agreed to relinquish certain Asiana routes to address competition concerns. Specifically, Korean Air divested Asiana's cargo business to Air Incheon and transferred operations of four European routes to T'way Air, ensuring that market competition remains intact.
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The process began with Korean Air acquiring 131,578,947 newly issued shares of Asiana Airlines, effectively concluding a share purchase agreement. This acquisition was finalized after Korean Air made a payment of KRW 800 billion ($558 million) to Asiana on December 11, 2024. Including a previously paid deposit of KRW 300 billion and an interim payment of KRW 400 billion, the total investment through this third-party capital increase reached KRW 1.5 trillion ($1.05 billion). The integration of Asiana into Korean Air isn't just about financial acquisition; it's a strategic move to bolster Korea's aviation industry on the global stage. This merger aims to strengthen national aviation competitiveness, enhance Incheon Airport's role as a global hub, and expand the network reach of both airlines. The combined operation will potentially make Korean Air one of the largest airlines in Asia, with an extensive network covering over 115 cities in 40 countries.
Korean Air has outlined plans for a smooth integration process. The airline announced that there would be no workforce restructuring during the initial phase, with employees in overlapping roles being reassigned within the organization. An extraordinary shareholders meeting for Asiana is scheduled for January 16, 2025, to appoint new board directors nominated by Korean Air. This acquisition also includes Korean Air's commitment to invest in fleet renewal, with plans to purchase 33 new Airbus A350 series aircraft to support the expanded operations. This move not only modernizes the fleet but also aligns with environmental goals by introducing more fuel-efficient aircraft.
The merger faces challenges, including cultural integration and maintaining customer loyalty amidst the transition. Korean Air has emphasized maintaining high service standards and ensuring that the combined entity can offer enhanced services and connectivity for passengers. As this deal wraps up, Korean Air and Asiana Airlines are poised to navigate through the complexities of integration, aiming to emerge as a formidable player in international aviation while maintaining their domestic stronghold. This step is expected to redefine the competitive landscape in Asia-Pacific aviation, potentially influencing future airline consolidations in the region.