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Air Incheon Chosen as Preferred Bidder for Asiana’s Freighter Business Amid Korean Air Merge

Air Incheon Chosen as Preferred Bidder for Asiana’s Freighter Business Amid Korean Air Merge

Air Incheon Asiana Freighter

In a significant development for South Korea’s aviation industry, Korean Air has announced Air Incheon as the preferred bidder for Asiana Airlines’ freighter business. This move is a crucial step towards meeting the European Union’s conditions for the merger of Korean Air and Asiana Airlines.

Key Factors Behind the Selection

Korean Air highlighted several reasons for selecting Air Incheon, the country’s only all-cargo airline, as the preferred bidder. The primary factors included the certainty of completing the transaction, Air Incheon’s potential to sustain and enhance Asiana’s air cargo competitiveness, and its capacity to raise capital through a reputable consortium. However, it is noteworthy that Air Incheon lacks experience in operating widebody jets, which presents a potential challenge.

Founded in 2012, Air Incheon currently operates four Boeing 737-800 converted freighters. With the acquisition of Asiana’s freighter business, which includes 10 Boeing 747-400 freighters and one 767, Air Incheon aims to expand its operations to the Americas and Europe. This expansion could significantly bolster Air Incheon’s capabilities and market presence.

Merger Background and European Commission Conditions

Korean Air's $1.35 billion bid for a majority stake in Asiana Airlines was announced in late 2020, during the height of the pandemic when Asiana faced severe financial difficulties. The European Commission has stipulated that the merger will only be approved if Asiana divests its freighter aircraft, airport slots, traffic rights, flight crew, other employees, and customer cargo contracts. These conditions are intended to maintain competitive balance in the air cargo market.

The European Commission’s approval is still pending, and the U.S. government has also expressed concerns regarding potential distortions in passenger markets due to the merger. The final decision from these regulatory bodies will be critical to the merger’s completion.

Future Steps and Expectations

Korean Air plans to sign a framework agreement with Air Incheon in July, following negotiations on contract conditions. This agreement will also require review and approval by the European Commission. Once Korean Air completes the acquisition of Asiana Airlines, the actual divestment of Asiana’s cargo operations to Air Incheon will proceed.

A representative from Korean Air stated, “The preferred bidder was selected through a comprehensive evaluation of all factors crucial to the growth of the air cargo industry, a key national industry, while maintaining the existing competitive environment. We are committed to quickly finalizing the sales process through flexible negotiations, and completing the acquisition of Asiana Airlines.”

This strategic move underscores Korean Air's commitment to expanding its cargo operations while adhering to international regulatory requirements. The successful integration of Asiana’s freighter business into Air Incheon could reshape the air cargo landscape in South Korea and beyond, enhancing competition and service delivery in the global market.

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