Passenger jets of Korean Air, Asiana Airlines and Air Premia are parked at Incheon International Airport, Nov. 2, 2023. Yonhap
By Lee Min-hyung
Jeju Air and T’way Air are expected to benefit from a planned acquisition of Asiana Airlines by Korean Air, as the integrated mega-sized carrier is set to transfer the rights of their lucrative businesses to the two low-cost carriers (LCC), according to industry officials, Tuesday.
Shares of the nation’s two largest LCCs have been on course for a gradual recovery in recent weeks on growing hopes that they will be able to widen their revenue streams after the acquisition.
Korean Air had to give up licenses for four European routes and sell Asiana’s cargo unit, as part of its remedy measures for European antitrust authorities to consider the possibility of approval. The European Commission (EC) is still reviewing the deal, but is known to have reached an internal consensus that it will grant a conditional approval for the acquisition. Earlier, the European watchdog shared its plan to finalize its decision by Feb. 14.
Jeju Air is reviewing its own acquisition of Asiana’s cargo unit, in a move to diversify its sales channels in the post-pandemic era. Asiana’s cargo business is considered a stable revenue generator, chalking up 1.13 trillion won ($849 million) in sales in the first three quarters of last year.
A spokesman at the nation’s largest LCC declined to confirm details on the matter, saying that nothing specific has been confirmed internally for the time being.
“We cannot confirm any details on the matter,” the official at Jeju Air said, declining to comment further.
Jeju Air’s share price has been on a gradual recovery for the past three months in anticipation of the cargo business acquisition. It hovered at around 12,700 won as of Tuesday, up more than 20 percent from three months earlier.
T’way Air is an undoubted beneficiary of the ongoing takeover deal. The LCC is widely expected to generate more sales once it wins the right to operate the four air routes from Korea to Frankfurt, Paris, Rome and Barcelona following the combination of the nation’s two major carriers. As part of a tradeoff to receive the EC’s approval, Korean Air decided to transfer the traffic rights to T’way Air.
T’way Air’s share price is rising more steeply than any other carriers this year. Its shares displayed a boxed-in pattern of around 2,200 won per share until the end of last year, but the price soared close to 3,000 won as of Tuesday, fueled by the increasing likelihood for the European authority to grant the approval for Korean Air’s long-delayed acquisition of Asiana.
“We have plans to launch our first European route to Paris as early as June this year, unless overseas competition authorities delay their decision further,” an official from the airline said.
Even if the EC gives its approval, Korean Air still has to get the green light from authorities in the United States and Japan, which many industry insiders expect will not be as time-consuming or tough as the one from Europe.
“Winning approval from the European authorities has been the biggest stumbling block for the deal,” an official at a domestic airline said on condition of anonymity. “The remaining procedures will likely make smooth progress after the EC makes its final decision.”
Korean Air said it will respond sincerely to any requests from overseas authorities before finalizing the deal.
“Korean Air has yet to receive any official notification from the European authority,” an official from Korean Air said. “We will keep doing our best to win approvals not just from Europe, but also the U.S. and Japan.”
