Korean Air, Air Incheon set terms for Asiana cargo business sale

[Courtesy of Korean Air Lines Co.]

South Korean flag carrier Korean Air Lines Co. has taken another step closer to obtaining final approval from the European Union’s competition authorities for its merger with Asiana Airlines Inc.

Korean Air and Air Incheon Co. announced on Wednesday that they concluded negotiations on the sale of Asiana Airlines’ cargo business, as well as signing a binding sale and purchase agreement with a sale price of 470 billion won ($341.84 million).

Korean Air will undergo a buyer review by the European Commission (EC) and will have cleared a major hurdle in its acquisition of Asiana Airlines if the EC gives its approval. The transfer of Asiana Airlines’ cargo business to Air Incheon will be executed after the final acquisition of Asiana Airlines.

The EC conditionally approved the merger of Korean Air and Asiana Airlines in February 2024. The conditions for approval include the return of four out of the fourteen European routes operated by both airlines and the sale of Asiana’s cargo business unit.

After clearing the cargo business sale hurdle, Korean Air expects to finalize the deal by receiving final approval from the EC and the U.S. Department of Justice (DOJ) by the end of 2024.

Socius Private Equity, a private equity fund (PEF) management firm and the largest shareholder of Air Incheon, formed an acquisition consortium with Korea Investment Partners and Inhwa Precision Co. Hyundai Glovis Co. is also considering joining the consortium as a strategic investor (SI), as it aims to expand its business into the aviation sector to strengthen its logistics competitiveness.

Meanwhile, Korean Air posted 4.02 trillion won in revenue in the second quarter of 2024, the largest quarterly revenue in its history. According to Korean Air’s provisional earnings announcement on Wednesday, the company’s operating profit for the second quarter totaled 413.4 billion won on a standalone basis, down 12 percent from the same period a year ago. Sales increased by 14 percent to 4.02 trillion won during the period, while net profit decreased by 6 percent to 349 billion won.