South Korea’s two main airlines agree to merger plan: Yonhap
ASIANA Airlines agreed to a plan to merge with Korean Air after long-running talks to address concerns about how the combination would impact competition on European routes, Yonhap News reported.
The plan, agreed upon Thursday (Nov 2) after three days of board meetings, includes selling Asiana’s cargo business to other South Korean carriers, removing the main obstacle to the merger. European Union regulators warned in May that Korean Air buying Asiana, first proposed in 2020, threatened competition on airfreight services to and from Europe, as well as passengers routes.
Of the five Asiana board members, three voted in favour of Korean Air’s plan, one opposed and another abstained, Yonhap said.
Korean Air will submit its revised proposals to the EU soon and await a decision.
The airline is also awaiting approval from the US and Japan. Others such as China and the UK have already given the green light to the plan, which includes selling four routes to European destinations.
State-run Korea Development Bank (KDB) has injected 3.6 trillion won (S$3.7 billion) of taxpayers’ money into trying to salvage debt-ridden Asiana. When outlining the merger in 2020, KDB said it would give South Korea a single, competitive national airline amid restructuring and consolidation in the industry.
Asiana’s shares have surged in anticipation of an agreement being reached, jumping as much as 24 per cent at one stage on Monday. After rising almost 7 per cent on Thursday morning in Seoul, Asiana was down about 1 per cent as of 1.08 pm local time. BLOOMBERG
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