Cargo unit sale agreement takes Korean Air closer to Asiana takeover

Surging Q2 revenue has buoyed Korean Air, and it now seems its lengthy pursuit of Asiana Airlines may be coming to fruition, the conditional divestment of that airline’s cargo unit seemingly settled.

Reporting its quarterly financials yesterday, South Korea’s flag-carrier said cargo revenue had shot up 13.8% year on year to a little under KRW1.1bn ($797m), pointing to e-commerce and “shipping replacement” demand as key drivers.

Korean said: “Revenue increases were driven by e-commerce volumes from China, on top of steady demand from the semiconductor, automotive and display industries.”

The carrier’s strong quarterly showing was quickly followed by news that Korean Air had signed a “basic business sale agreement” with Air Incheon for Asiana Airlines’cargo division after the takeover.

That sale being agreed is expected to lift the regulatory roadblocks to Korean acquiring Asiana’s passenger business.

Having announced plans to acquire Asiana in November 2020, proceedings were delayed first by the pandemic, and then the EC stepped in, claiming  a merger of Asiana and Korean would dominate South Korea’s long-haul cargo market and prove anti-competitive.

Consequently, in October, Korean proposed it would sell Asiana’s cargo unit to resolve the EC’s concerns, and in February, the commission issued a provisional greenlight for the acquisition, on condition Asiana’s cargo business was sold.

Air Incheon also announced that it would, post takeover, transfer routes between Incheon and Barcelona, Frankfurt, Paris, and Rome to T’way Air.

In June, it emerged as the preferred bidder for Asiana, having trumped two other buyers, Air Premia and Eastar Jet.

At the time, Korean said: “The preferred bidder was selected via comprehensive evaluation of all factors crucial to growth of the air cargo industry, a key national industry, while maintaining the existing competitive environment.

“We are committed to quickly finalising the sales process through flexible negotiations and completing the acquisition of Asiana Airlines.”