Korean Air to buy cash-strapped Asiana Airlines
South Korean aviation could be in line for consolidation.
The country’s largest airline Korean Air announced it intends to buy a stake in debt-ridden Asiana Airlines.
It will pay $1.6 billion for a 31% share.
"The main reason behind Korean Air’s decision to acquire Asiana Airlines at this time is to stabilise the Korean aviation industry, which is suffering from the Covid-19 pandemic," Korean Air said in a statement.
It includes Asiana’s local affiliates Air Seoul and Air Busan.
"Considering that Korean Air’s financial status could also be endangered if the Covid-19 situation is prolonged, it is inevitable to restructure the domestic aviation market to enhance its competitiveness and minimise the injection of public funds," the Korean Air statement added.
Asiana’s main creditor Korea Development Bank will also inject funds.
A previously planned sale of Asiana Airlines broke down in September due to the Covid-19 impact on the industry.
Hyundai Development Co and Mirae Asset Daewoo had earlier agreed to buy the airline for about $2.25 billion.
However as the pandemic battered the industry, they tried on several occasions to renegotiate the deal and eventually it collapsed.
Asiana’s debts have reportedly swelled to about $11 billion.
A merger between the top two airlines in the country would make it a major force in Asia but could spark anti-trust concerns.
Written by Ray Montgomery, Asia Editor
TravelMole Editorial Team
Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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