Korean Air submits plans after Asiana takeover to main creditor

SEOUL, March 17 (Yonhap) -- Korean Air Lines Co. on Wednesday submitted plans on how to integrate Asiana Airlines Inc. after the merger, including the workforce and the handling of low-cost carriers under the two airlines, Asiana's main creditor said.

Korean Air, the country's largest airline, finished due diligence on its smaller rival Asiana early this month and received the first approval from Turkey over the merger of the country's two biggest airlines last month.

The program reportedly includes measures to keep the current workforce at Asiana and to integrate low-cost carrier units of the two airlines.

Korean Air and the state-run Korea Development Bank (KDB), Asiana's main creditor, have said there will be no layoffs at Asiana following the planned acquisition. But it appears to be inevitable for the national flag carrier to reorganize redundant workforce at Asiana.

Korean Air's takeover of Asiana is expected to gain speed once the KDB completes its review of the proposed plan by April.

On Wednesday, the KDB launched an assessment committee to see if Korean Air carries out its proposed post-merger scheme as planned and makes efforts to strengthen its competitiveness.

Last week, Korean Air raised 3.3 trillion won (US$3 billion) in a share sale to finance the acquisition. Of the proceeds, it plans to spend 1.5 trillion won to buy Asiana and use the remaining 1.8 trillion won to pay back its debts.

To proceed with the deal, Korean Air submitted documents by Jan. 14 to antitrust authorities in the countries to which the carrier flies for review of the merger.

The eight countries are South Korea, the United States, China, Japan, Turkey, Vietnam, Taiwan and Thailand.

Korean Air has yet to obtain approval from seven other countries over the merger plan.

But the national flag carrier expects no major problems in obtaining approval from overseas for the merger given that bigger merger deals went smoothly in the past.

Korean Air and Asiana account for a combined 40 percent of passenger and cargo slots at Incheon International Airport, South Korea's main gateway. It does not constitute a monopoly.

The two airlines have suspended most of their flights on international routes since March 2020 as countries have strengthened their entry restrictions to stem the spread of the pandemic.

They focused on winning more cargo delivery deals to offset the pandemic-caused slump in travel demand.

As a result, Korean Air's net losses narrowed to 291.45 billion won in 2020 from 622.76 billion won a year earlier. Asiana's net losses also narrowed to 404.51 billion won from 817.89 billion won during the same period.

kyongae.choi@yna.co.kr
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