Asiana Airlines delays decision on cargo business sell-off
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Asiana Airlines board members plan to hold another round of meetings soon after they failed to reach an agreement on the previous day on whether to sell the air carrier’s cargo business to clear the way for approval of its planned merger with Korean Air.
On Monday, Asiana’s five board directors discussed the sell-off plans but failed to reduce their differences even after a seven-hour meeting. Some members reportedly opposed the plans, saying that the sale of the cargo unit could potentially constitute a breach of trust.
Regardless of Asiana’s decision, Korean Air said Tuesday its board members approved a revised merger plan to be submitted to the European Commission, which has delayed approving the 1.8 trillion won ($1.13 billion) merger citing antitrust concerns.
The new merger plan includes Korean Air’s plans to divest air routes connecting four European cities as well as Asiana’s ditching cargo business, according to the company’s regulatory filing on Tuesday.
Korean Air’s board also approved Korean Air’s acquisition of Asiana’s new stocks worth 1.5 trillion won on the condition of its sell-off of cargo business.
On Monday, Asiana’s five board directors discussed the sell-off plans but failed to reach an agreement. Some members reportedly opposed to the sell-off, saying that the sale of carbo business could potentially constitute a breach of trust.
“The board members will resume the meeting in early November to make a final decision,” Asiana said in a statement.
News reports said the board meeting is likely to be convened Thursday, but the company refused to confirm.
“We expect a reasonable decision to be made at the Asiana board meeting,” a Korean Air official said. The official said that the company would submit the revised merger plan after adjusting the deadline with the EC. The original deadline had been set for the end of October.
Korean Air’s revision to its proposal plan initially submitted to the EC comes as the company aims to address the European Union antitrust regulators' concern that the merged unit could dominate passenger and cargo services between Korea and European cities.
In June, Korean Air announced it had asked the EC for more time to prepare changes to its acquisition plan so that it could address its concerns regarding the merged unit's possible monopolization of flights connecting Korea to Europe.
The EC has since announced that it will accept Korean Air’s request, and temporarily suspend its investigation into Korean Air's proposed acquisition of Asiana.
As of the first half of 2023, Asiana’s cargo business performance accounted for 24 percent of total sales, second only to sales generated from transporting international passengers (62 percent).
Out of the 14 countries from which the company needs approval to complete the 1.8 trillion won ($1.3 billion) merger with Asiana, 11 countries, including Britain, China and Australia, have approved the merger. As of the first week of October, Korean Air is awaiting a decision from Japan, the European Union and the US.
By Shim Woo-hyun(ws@heraldcorp.com)
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