Posted on 02/13/2025 12:14:45 AM PST by Cronos
It’s official. One of the most drawn-out airline acquisitions in aviation history has concluded. On Thursday, Korean Air confirmed it has taken a majority stake in local rival Asiana Airlines. The flag carrier described the outcome as a “strategic milestone for Korea’s aviation industry.”
It’ll be many months before the full impact of the deal is realized, but be under no doubt – this is an airline mega-merger with global implications.
To help make sense of it all, we answer some of the most pressing questions about the transaction and the likely longer-term changes to the airline industry.
What’s the (Very Short) History of the Deal? Thursday’s developments are four years in the making. In November 2020, at the peak of the Covid-19 crisis, Korean Air said it wanted to acquire a controlling stake in Asiana.
At the time, the $1.6 billion deal was framed not only as a response to the challenges of the pandemic but also as a solution to more systemic issues in South Korea’s aviation industry. The formal application process to global regulators started in January 2021.
What’s Taken so Long? Airline mergers and acquisitions are rarely straightforward – just ask JetBlue – however even by industry standards, the Korean tie-up has been prolonged. Aside from complications of the pandemic, a major obstacle has been winning the approval of 14 different global regulators.
Türkiye was the first to approve the merger in early 2021,
On December 12, Korean Air acquired 131,578,947 newly issued shares of Asiana Airlines, representing a 63.88% ownership stake and making Asiana Airlines a subsidiary of Korean Air
The completion follows Korean Air's payment of KRW 800 billion to Asiana Airlines on December 11, concluding the share purchase transaction. This brings the total investment through the third-party allotment capital increase to KRW 1.5 trillion, including the previously paid deposit of KRW 300 billion and interim payment of KRW 400 billion.
Asiana Airlines will hold an extraordinary general meeting of shareholders on January 16 to appoint new board directors nominated by Korean Air.
Korean Air plans to complete the integration with Asiana Airlines within two years. The integration strategy includes network optimization through diversified flight schedules on overlapping routes, service expansion to new destinations and enhanced safety investments. The merger aims to strengthen national aviation industry competitiveness, enhance Incheon Airport's hub capabilities and expand global network reach.
The integration will proceed without workforce restructuring. The combined organization projects natural staff growth through business expansion, with employees in overlapping functions being reassigned within the organization.
The integrated frequent flyer program framework will be submitted to the Korea Fair Trade Commission by June 2025. Program details will be communicated to customers following regulatory review.
The acquisition represents a strategic milestone for Korea’s aviation industry. Korean Air will proceed to implement measures to strengthen the country’s aviation capabilities and enhance its competitive position in the global market.
According to the International Air Transport Association, Korean Air Lines ranked at 19th and Asiana Airlines 29th in passenger and cargo transportation last year. When they are combined, they would become 7th. As of last year, Korean Air Lines had revenue of 12.2 trillion won and Asiana Airlines 6.9 trillion won and combined assets come to 40 trillion won.
Wi Tu Slo
This makes Korean Air the Seoul airline based in Korea.
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