Korean Air, Air Incheon agree to $342 million sale of Asiana's freight business

Korean Air has sealed a legally binding agreement to sell Air Incheon the freight business of Asiana Airlines for 470 billion won in a move to finalize their merger.

Boeing's 777-9 and 787-10 aircrafts [KOREAN AIR]

Korean Air sealed a legally binding agreement with Air Incheon to sell Asiana Airlines' freight business for 470 billion won ($342 million), according to the flag carrier's regulatory filing Wednesday.

The sale still needs approval from the European Commission before the final green light is granted for Korean Air's proposed merger with Asiana.

The sell-off of Asiana's cargo business, which is valued at around 1 trillion won, was a part of the conditions set by the commission concerning the potential monopolization of European cargo routes after the merger of Korea's two full-service carriers.

If the commission approves the merger, Korean Air is only left to seek approval from the United States among the 14 mandatory reporting countries.

The flag carrier expects to receive U.S. approval in October, about four years after the merger was initiated.

"The actual transaction between Korean Air and Air Incheon will be made within six months of Korean Air's takeover of Asiana," a spokesperson for Korean Air said.

Asiana's cargo business unit has 11 aircraft and recorded an annual revenue of 1.6 trillion won in 2023.

Korean Air also surrendered four routes to European cities — Rome, Barcelona, Frankfurt and Paris — to local budget carrier T'way Air. Divesting four European routes was also a condition presented by the European Commission to approve of the takeover.

Completion of the merger will result in one of the top 10 biggest carriers worldwide with more than 200 planes generating around 20 trillion won in annual revenue.

Korean Air plans to keep Asiana as a subsidiary for two years before fully subsuming it. The two airlines will exchange employees during the intermediary period.

In light of the planned merger, Korean Air is speeding up its fleet modernization by purchasing 50 widebody aircraft from Boeing in a deal possibly worth up to 30 trillion won.

BY SARAH CHEA [chea.sarah@joongang.co.kr]