Korean Air said Monday it has selected Air Incheon, Korea’s only all-cargo airline, as the preferred bidder for the sale of Asiana Airlines’ freighter business to satisfy European Union conditions for the companies to merge.
South Korea’s largest airline said it selected Air Incheon for several reasons, including the certainty of completing the transaction, its ability to maintain and grow the long-term competitiveness of Asiana’s air cargo business, and the ability to raise capital through a reputable consortium. One downside, however, is that Air Incheon doesn’t have experience operating widebody jets.
Air Incheon, founded in 2012, plans to utilize Asiana’s large freighters to expand its operations from Asia to the Americas and Europe. It currently has four small Boeing 737-800 converted freighters in its fleet, according to third-party aviation databases. Asiana operates 10 Boeing 747-400 freighters and one 767.
Korean Air has 23 freighters in its fleet, including seven Boeing 747-8s and a dozen 777 aircraft.
Korean Air announced its $1.35 billion bid for two-thirds of Asiana Airlines during the height of the pandemic in late 2020, when Asiana experienced financial trouble.
The European Commission said in February it will approve Korean Air’s takeover if Asiana divests its freighter aircraft, airport slots, traffic rights, flight crew, and other employees, as well as customer cargo contracts. The European Commission must approve Air Incheon before the transaction can close. Once Korean Air completes the acquisition of Asiana Airlines, the actual cargo divestment process will take place.
The U.S. government still has concerns that Korean Air acquisition of Asiana would distort passenger markets and has not issued an approval decision yet.
Korean Air said it plans to sign a framework agreement with Air Incheon in July after agreeing on the contract conditions. The agreement is subject to review by the European Commission.
“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,” said a Korean Air representative. “We are committed to quickly finalizing the sales process through flexible negotiations, and completing the acquisition of Asiana Airlines.”
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