Asiana Airlines Inc. agreed to a plan on merging with Korean Air after holding long-running talks to overcome concerns about how their combination might impact competition on European routes.
The plan, signed off at a board meeting Thursday, includes selling Asiana’s cargo business to another South Korean carrier, removing the main obstacle to the merger. Others will also be allowed to use the airlines’ Seoul to Paris, Frankfurt, Rome and Barcelona routes.
European regulators feared that if Korean Air took over Asiana, a move first proposed in 2020, it would threaten competition on airfreight services to and from Europe, as well as passengers routes.
Read More: Korean Air Seeks to Fix EU Concerns Over $1.3 Billion Asiana Buy
Three Asiana board members voted in favor of the plan, one opposed it and another abstained, a spokeswoman at Asiana told Bloomberg News.
Korean Air said it will submit the new proposals to European authorities and await a decision. The airline aims to win approval by the end of January.
It is also awaiting the nod from the US and Japan. The airline said it will talk with US authorities and submit a proposal to Japan, with expectations of a decision in early 2024.
“While Korean Air continues its efforts to secure approval from the European Commission, the airline will also communicate closely with the remaining regulatory bodies to finalize the approval process as quickly as possible,” a Korean Air spokesperson wrote in a text message to Bloomberg News.
Others such as China and the UK have already given the green light to the plan.
Korean Air said it will seek a buyer that guarantees Asiana’s cargo workers keep their jobs.
“Korean Air proposed alternative ways to ease competition concerns but the EC rejected all of them — the cargo business sale was the only option to propose for winning approval,” the spokesperson said.
State-run Korea Development Bank has injected 3.6 trillion won ($2.7 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.
Having surged in anticipation of an agreement being reached, Asiana’s shares slid Thursday afternoon in Seoul, dropping 7.7% as of 2:45 p.m.
More on mergers in the aviation industry:
- Spirit CEO Says Pandemic Losses Pushed It to JetBlue Merger
- Italy Sees Closing of ITA Stake Sale to Lufthansa by End of 2024
- Air India Plots Rapid Buildout of Budget Unit, Taking On Indigo
- Air France-KLM Takes SAS Stake in $1.2 Billion Restructuring
(Updates with Asiana announcement and Korean Air comments. An earlier version corrected third paragraph to show one board member abstained.)
