Korean Air has selected Air Incheon as the preferred bidder for the sale of Asiana Airlines’ global cargo business. The decision was made at the Board of Directors meeting held on June 17, says an official release from Korean Air.
“Korean Air selected Air Incheon as the preferred bidder based on several key criteria: the certainty of completing the transaction, the ability to maintain and enhance long-term competitiveness of the air cargo business, and the capability to mobilise funds through a competent consortium.”
Founded in 2012, Air Incheon is Korea’s only all-cargo airline with operations focused on Asia, the release added. “Air Incheon is expected to strengthen its competitiveness by utilising Asiana Airlines’ long-haul network to the Americas and Europe and fleet of larger cargo aircraft.”
The agreement, which is subject to review by the European Commission, is likely to be finalised in July.
“The preferred bidder was selected through a comprehensive evaluation of all factors crucial to the growth of the air cargo industry, a key national industry, while maintaining the existing competitive environment,” says a Korean Air representative. “We are committed to quickly finalising the sales process through flexible negotiations and completing the acquisition of Asiana Airlines.”
Korean Air-Asiana deal cleared by EUThe European Commission had approved in February, under its merger regulation, the proposed acquisition of Asiana Airlines by Korean Air on the condition that Korean Air will divest Asiana’s global cargo business. The deal is likely to be valued at around $1.4 billion, Reuters reported.
“The divestment includes freighter aircraft, slots, traffic rights, flight crew and other employees as well as customer cargo contracts, among others,” the ruling said. “Korean Air can only implement the acquisition of Asiana following the Commission’s approval of a suitable buyer for the cargo divestment. Among other requirements, the buyer must be able and have the incentives to operate the divested business in a viable manner and to compete effectively with the merged company.”
Margrethe Vestager, Executive Vice-President in charge of competition policy, European Commission said while clearing the merger: “This merger raised significant competition concerns in both cargo and passenger air transport services. However, Korean Air committed to the divestment of Asiana’s global cargo freighter business to a suitable purchaser, and to the divestment of assets to facilitate the entry of rival airline T’Way on key passenger routes. These remedies effectively address our concerns, and will ensure fair competition and consumer choice in this vital sector.”
