Korean Air and its owner Hanjin Group have announced plans to acquire rival Korean carrier Asiana Airlines. The deal, which is worth ₩1.8 trillion ($1.6 billion), was made “to stabilize the Korean aviation industry, which is suffering from the COVID-19 pandemic,” according to Hanjin Group.
The combination is expected to create “one of the top ten airlines in the world.”
As things stand, South Korea has two full service carriers, which according to Hanjin, “gives it a competitive disadvantage compared to countries like Germany, France and Singapore with a single major airline.”
Korean Air will issue ₩2.5 trillion ($2.25 billion) of new shares in early 2021 in order to fund the acquisition, with Hanjin KAL receiving a ₩800 billion ($722 million) investment from Korea Development Bank.
“Korean Air’s acquisition and the expansion of its routes, fleet and capacity will give the airline the competitiveness to compete with global mega airlines,” said Hanjin Group. Asiana’s fleet consists of around 80 aircraft, while Korean Air operates around 170 aircraft.
“More slots secured at Incheon International Airport, a transport hub in Asia, through the consolidation of the airlines, may lead to an increase in joint ventures with global airlines and greater transfer demand, which will also spur the growth of the domestic aviation industry,” said the Hanjin Group statement, which would bolster Incheon’s standing as a major hub for both its passenger and cargo network.