Korean Air has received the green light from the European Union to acquire Asiana Airlines. The approval comes with conditions, including the sale of Asiana’s cargo unit and the divestment of routes to four European cities to a competitor, following months of negotiations.
Korean Air, the largest carrier in South Korea, unveiled its ambitious bid to acquire a controlling stake in Asiana Airlines, which has been grappling with financial challenges, back in late 2020. The deal, valued at 1.8 trillion won ($1.35 billion), aims to solidify Korean Air’s position in the region’s aviation market, reported Reuters.
The EU’s decision marks a significant milestone for Korean Air’s expansion plans, amidst a backdrop of consolidations within the airline sector. Recent months have witnessed a flurry of merger activities, including Lufthansa’s bid for a stake in Italy’s ITA Airways and IAG’s move to acquire the remaining shares of Spanish carrier Air Europa.
“With the EC approval secured, Korean Air continues to be focused on its discussions with the U.S. competition authority to finalize the overall merger review processes as soon as possible,” Korean Air stated in response to the EU’s decision.
Read more: European Regulator Further Delays Korean Air-Asiana Merger
To address competition concerns raised by the European Commission, Korean Air and Asiana Airlines have agreed to significant concessions. These include the divestment of Asiana’s global cargo freighter business and the transfer of slots, traffic rights, and aircraft to Korean budget airline T’Way for routes connecting to Barcelona, Paris, Rome, and Frankfurt.
The approval of this deal by the EU competition enforcer could set a precedent for future airline mergers. The conditions imposed on Korean Air to ensure fair competition and consumer choice highlight the regulatory scrutiny faced by such transactions in the aviation sector.
However, the implementation of the acquisition is contingent upon further regulatory approvals. Korean Air must await the Commission’s approval of the buyer for Asiana’s cargo business, as well as T’Way’s commencement of operations on the designated routes.
Despite these hurdles, Korean Air remains optimistic about the completion of the merger. The airline has already secured approval from 13 out of 14 regulatory authorities requiring business combination approvals, indicating progress towards finalizing the transaction.
Source: Reuters
