Korean Air Acquires Asiana Airlines

By Lisa Barrington
SEOUL (Reuters) – Korean Air announced on Thursday that it has finalized its long-awaited purchase of rival Asiana Airlines, becoming one of Asia's largest carriers. This 1.8 trillion won ($1.3 billion) deal, which is the longest merger in airline history, was first disclosed four years ago to support the debt-stricken Asiana amid declining demand due to the COVID-19 pandemic.

The acquisition faced challenges from competition regulators, requiring Korean Air to make significant concessions, such as relinquishing routes to other airlines and divesting Asiana's cargo operations. By acquiring a 63.88% stake in Asiana on Thursday, Korean Air made it a subsidiary, albeit three years later than initially planned. The merged entity could represent just over half of South Korea's passenger capacity and rank as the 12th-largest airline globally by international capacity, according to data from Reuters, Cirium, and OAG.

In terms of revenue, it would be comparable to China's leading three state-owned carriers, based on 2023 financial outcomes. Korean Air emphasized that there would be no layoffs as a result of the integration. The company stated that natural staff growth would occur through business expansion, with employees in overlapping roles being reassigned.

Asiana will operate as a subsidiary for up to two years before merging under the Korean Air brand but with updated branding. The integration strategy includes establishing a single low-cost airline, adjusting flight schedules on overlapping routes, adding new destinations, and investing more in safety.

Korean Air plans to submit a proposal to merge the two airlines' frequent flyer programs to the Korea Fair Trade Commission by June 2025.

This merger is aimed at enhancing the capabilities and network reach of Incheon International Airport, which is the world's fourth-busiest for international flights and fifth-busiest for cargo, competing against major Asian hubs like Hong Kong and Singapore.

Airline consolidation is less common in Asia compared to Europe, which has witnessed a flurry of mergers in the past two decades, and North America, where regulators are concerned about industry concentration.

Korean Air asserts that this deal will bolster its global competitive position. Additionally, Asiana will schedule an extraordinary general meeting on January 16 to elect new board directors nominated by Korean Air.