Korean Air to launch Asiana-merged entity in 2024
By Kim Eun-jung
SEOUL, March 31 (Yonhap) -- Korean Air Lines Co., South Korea's largest airline, said Wednesday it plans to launch a merged entity with its smaller rival Asiana Airlines Inc. in 2024 after completing a takeover process next year.
Korean Air, which announced plans to acquire the debt-ridden Asiana for 1.8 trillion won (US$1.6 billion) in November, has submitted a post-merger integration plan to the state-run Korea Development Bank (KDB), Asiana's main creditor.
Although Korean Air initially planned to finalize the deal within this year, it delayed the schedule due to regulatory review processes. It has received the first approval from Turkey and still needs nods from eight other countries, including South Korea, the United States, China and Japan.
"We are working closely with consulting companies in each country to complete the approval process by the end of the year," Korean Air President Woo Kee-hong said in an online press briefing. "Korean Air plans to fully integrate with Asiana Airlines about two years after (the acquisition)."
Once the merger is finalized, Hanjin KAL will serve as a holding company for Korean Air, which in turn controls Asiana Airlines, Woo said.
Earlier this month, Korean Air raised 3.3 trillion won 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.
Although Korean Air does not plan to lay off Asiana employees following the acquisition, Woo said the company will reorganize redundant subsidiaries and their workforces and mull ways to combine the two airlines' low-cost carriers to "create synergy."
The CEO said the global airline industry is expected to show a full recovery after 2022, noting the company will sell non-core assets and continue cost-cutting efforts to tide over the industry slump triggered by the COVID-19 pandemic.
Korean Air and Asiana account for a combined 40 percent of passenger and cargo slots at Incheon International Airport, South Korea's main gateway, below the level that constitutes a monopoly.
The two airlines have suspended most of their flights on international routes since March 2020 as the countries have strengthened their entry restrictions to stem the spread of the COVID-19 pandemic.
They have 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.
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