Korean Air Co Ltd plans to spend $1.62 billion to become the top shareholder of indebted Asiana Airlines Inc, in aviation’s first major consolidation since Covid-19 brought the industry to its knees.
It will also be the biggest shake-up in South Korean air travel, with the airline eventually integrated into Korean Air to create a national carrier commanding about 60 per cent of international routes.
Working together is likely to give the pair a greater chance of avoiding the fate of several airlines worldwide, where virus-busting restrictions on movement and border closures have decimated passenger demand and forced carriers into bankruptcy.
The main reason behind Korean Air’s decision to acquire Asiana Airlines at this time is to stabilize the Korean aviation industry, which is suffering from the Covid-19 pandemic,” Korean Air said in a statement.
“Once Korean Air completes its acquisition of Asiana Airlines, the airline is expected to be ranked as one of the top 10 airlines in the world.”
Korean Air said it would pay 1.8 trillion won for Asiana, using cash from a 2.5 trillion won rights issue early next year.
The deal also involves an investment from the Korea Development Bank, which said it hopes to get regulatory approvals by the end of next year.
State-run KDB said earlier Monday that it hopes to complete the transactions this year and seek approvals from antitrust bodies globally by the end of 2021.