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Korean Air Clears EU Hurdle in Asiana Takeover with Strategic Divestments

Agreement to sell Asiana's cargo unit and routes to European cities paves the way for merger approval
South Korea
k 003490.KO Mid and Small Cap 2000
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Korean Air has received the European Union’s antitrust approval for its acquisition of Asiana Airlines, marking a significant step forward in the consolidation of South Korea’s aviation sector. This approval comes after Korean Air agreed to divest Asiana Airlines’ cargo unit and relinquish routes to four European cities, addressing the EU’s competition concerns.

The deal, valued at 1.8 trillion won ($1.35 billion), was announced in late 2020, positioning Korean Air to become the top shareholder of the financially troubled Asiana. This acquisition is part of a broader trend of consolidation within the airline industry, highlighted by Lufthansa’s investment in ITA Airways and IAG’s pursuit of Air Europa.

Korean Air’s commitment to addressing regulatory hurdles is evident in its engagement with 13 of the 14 required regulatory authorities worldwide. With the European Commission’s nod, the airline focuses on concluding discussions with the U.S. competition authority to finalize the merger.

The European Commission’s approval is contingent upon the sale of Asiana’s cargo business and the transfer of slots, traffic rights, and aircraft for routes to Barcelona, Paris, Rome, and Frankfurt to T’Way, a Korean budget airline. This arrangement aims to preserve competition and consumer choice, ensuring that the merger does not adversely affect the market dynamics.

EU antitrust chief Margrethe Vestager highlighted that the remedies effectively mitigate competition concerns, setting a precedent for future airline mergers and acquisitions. This strategic divestment and route allocation ensure that the merger progresses without compromising the competitive landscape, marking a critical juncture in Korean Air’s ambitious expansion plans.

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