Formal bids invited to take over Asiana Airlines' cargo unit
The takeover battle for Asiana Airlines’ cargo business has taken a new direction now sale ...
By Martina Li
As Korean Air and Korea Development Bank gear up to select a preferred buyer for Asiana Airlines’ cargo arm, two of the four shortlisted suitors are taking steps to improve their chances.
Eastar Jet, which gave up its air operator certificate (AOC) during Covid, applied to regain it and indeed received it on 6 March. The South Korean low-cost carrier (LCC) used to carry bellyhold cargo, but suspended operations as tourism ground to a halt in 2020.
To be eligible to bid for Asiana’s freight business, candidates must possess an AOC; an indication therefore that Eastar Jet was eyeing qualifying to bid.
For the European Commission to approve Korean Air’s merger with Asiana, the latter has to divest its cargo arm to another South Korean carrier and the government is pushing for the merger in order to bail out Asiana, which became heavily indebted after the pandemic.
Jeju Air, widely favoured to acquire the cargo arm, given its status as South Korea’s largest LCC, has appointed multinational consulting firm Bain & Co to conduct due diligence on the target. It is understood that Jeju has contracted with Bain’s Advanced Manufacturing Services division, whose expertise includes aerospace and defence, aviation and transport.
The other suitors, Eastar Jet, Air Premia and Air Incheon, have appointed major audit firms to carry out the due diligence.
Jeju Air, part of the Aekyung chaebol, is also reportedly considering a funding proposal from a group of private equity investors.
Asiana’s cargo unit, which operates nine 747-400Fs and one 767F, according to CH Aviation, is valued at between $382m and $535m. The new owner will, however, have to take on its debt of more than $760m.
Asiana’s freighter fleet has an average age exceeding 20 years, and this month the carrier announced plans to buy two B747-400 freighters for $55m from Taiwan’s China Airlines and to lease two more for six years to renew the fleet.
A preferred bidder is expected to be chosen in late April or May.
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