Annual synergies of 300 billion won expected

Korean Air and Asiana Airlines aircraft on the tarmac at Incheon International Airport [Yonhap]
Korean Air and Asiana Airlines aircraft on the tarmac at Incheon International Airport [Yonhap]

South Korea's Ministry of Land, Infrastructure and Transport approved the corporate merger of Korean Air and Asiana Airlines on Thursday.

The integration process began in November 2020, when the Korea Development Bank decided to sell Asiana Airlines to Korean Air. Since then, the deal has cleared competition reviews in 13 jurisdictions — including the United States, the EU and Japan — as well as a business combination approval from the Korea Fair Trade Commission.

Having completed the acquisition of Asiana Airlines, Korean Air applied to the land minister for merger approval. The ministry reviewed the application under relevant statutes and decided to grant conditional approval. Korean Air now plans to proceed with the remaining steps toward a target merger date of Dec. 17 this year.

Because the merger involves major air carriers, the ministry applied the licensing criteria under the Aviation Business Act, reviewing the relevant requirements at a level equivalent to that for a new license.

A ministry official said the review included consultation from a dedicated merger advisory panel composed of specialists in aviation, consumer affairs, employment, law and accounting, as well as independent assessments by research institutes and accounting firms. "Through this process, we confirmed that the statutory requirements were met, and finalized the merger approval after a licensing advisory meeting," the official said.

The ministry granted conditional approval after weighing several factors: the need for periodic checks to ensure Korean Air carries out the plans it submitted during the review, the requirement to complete a safety management system change inspection, and the need to obtain approvals from overseas aviation authorities.

Lee So-young, the ministry's aviation policy director, said the merger of the country's two largest national carriers would have a broad impact on the aviation market as a whole, and pledged that the ministry would strictly oversee the combined airline to ensure aviation safety and consumer convenience are not diminished.

She went on to say that Korean Air, as the country's foremost national carrier, should fulfill its social responsibilities befitting that status — even before government regulation and oversight require it to do so.

Meanwhile, Korean Air projected that annual synergies of more than 300 billion won ($195 million) following the merger with Asiana Airlines would allow it to offset integration costs of up to 1 trillion won starting in late 2028.


hss@heraldcorp.com