News / EC gives Asiana takeover the green light – dependent on cargo sale

The EC’s competition regulator has approved Korean Air’s proposed acquisition of fellow South Korean carrier Asiana, provided the two sell Asiana’s cargo operations.

In addition, the takeover of Asiana will remain dependent on EC approval of the buyer of its cargo business, as well as parts of its passenger operation.

The merger of the two domestic airlines was mooted by the South Korean government during Covid, and it was an open secret that at least some part of the cargo business would need to be divested.

“The commission found that Korean Air and Asiana compete head-to-head in carrying cargo and passengers between the EEA and South Korea. Together, they would have been by far the largest carrier on these routes, removing an important alternative for customers,” said the EC today.

“Other competitors face regulatory and other barriers to expand their services and would have been unlikely to exert sufficient competitive pressure on the merged company. This would likely have led to increased prices or decreased quality for passengers and cargo customers,” it added.

EC competition commissioner Margrethe Vestager explained: “Korean Air committed to the divestment of Asiana’s global cargo freighter business to a suitable purchaser; and to the divestment of assets to facilitate the entry of rival airline T’Way on key passenger routes.

“These remedies effectively address our concerns, and will ensure fair competition and consumer choice in this vital sector,” she said.

The EC noted that the cargo sale would “include freighter aircraft, slots, traffic rights, flight crew and other employees, as well as customer cargo contracts”.

It added: “Among other requirements, the buyer must be able, and have the incentive, to operate the divested business in a viable manner and to compete effectively with the merged company.”

However, it remains unclear if the current crop of potential buyers of Asiana Cargo would fulfil these provisos – The Loadstar recently reported that four South Korean low-cost carriers, Eastar Jet, Air Premia, Air Incheon and Jeju Air, had expressed interest to Korean Air, but their lack of experience in operating a widebody fleet could be a stumbling block.

Asiana’s cargo unit, which operates nine 747-400Fs and one 767F, according to CH Aviation, is valued at between $382m and $535m, and the new owner will have to take on its debt of more than $760m.