South Korean airlines Korean Air will take over the indebted domestic rival Asiana Airlines for 1.8 trillion won (36 billion crowns). The South Korean airline stated this in its Monday announcement, stating that it will be among the ten largest airlines in the world. It is the largest regrouping of forces in South Korean aviation since the establishment of Asia before the Olympics in 1988 and the first major merger of airlines since the start of the coronavirus pandemic.
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Korean Air intends to finance the move by issuing new shares worth 2.5 trillion won next year. This will create a national carrier that will serve about 60 percent of international connections. The contract has yet to be approved by the supervisory authorities.
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For Asia, South Korea’s airline, the deal is a bailout after the largest shareholder, Kumho Industrial, withdrew from negotiations to buy it. Since September, the company has survived thanks to a cash injection from the Korea Development Bank (KDB).
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The merger aims to help both airlines avoid the fate of many other global airlines, which are nearing bankruptcy due to coronavirus flight restrictions, closed borders and falling demand.
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