ANN/THE KOREA HERALD – The board of Asiana Airlines, the second-largest airline in the South Korea, has given the green light to a proposal to divest the company’s cargo business, a move widely regarded as vital for its prominent merger with its larger competitor, Korean Air.
Asiana announced the board’s approval of the divestiture plan. Korean Air swiftly submitted a revised merger proposal, which incorporates the sale of Asiana’s cargo unit, to the European Commission. The decision came three days after the five-member board failed to reach an agreement even after almost eight hours of heated discussions.
They met again in which four out of five members participated. The decision was reached in a 3-1 vote.
In May this year, Europe’s antitrust regulators delayed its decision on the KRW1.8 trillion (USD1.3 billion) Korean Air-Asiana merger, saying the merger could restrict competition in the markets for passengers and cargo transport services between the European Union (EU) and Korea.
To ease monopoly concerns, Korean Air decided to submit its remedies, which include the sale of Asiana’s cargo business and a plan to divest its four routes connecting European cities. The company said its board approved the revised plan, saying it also plans to acquire new stocks worth KRW1.5 trillion if the cargo business sale goes through.
The board approval, however, does not remove several obstacles to completing the merger deal. Asiana’s union is still against the sale of the lucrative cargo business. Possibly reflecting investor concerns, Asiana shares closed almost nine per cent lower on the day compared to the previous trading day.
As of the first half of 2023, cargo business made up 24 per cent of Asiana’s sales, second only to sales from transporting international passengers (62 per cent).
Out of the 14 countries from which Korean Air needs approval to close the merger deal, 11 countries have approved it.
It is still awaiting a decision from the EU, the United States and Japan.
