EU approves sale of Asiana’s cargo business to Air Incheon
29 / 11 / 2024
Source: Thanhliemnguyen/Shutterstock
The European Commission has approved the sale of Asiana Airlines’ cargo business to Air Incheon to enable Korean Air to move closer to acquiring Asiana Airlines.
On February 13, the Commission approved the proposed acquisition of Asiana by Korean, but as part of this, Korean had to commit to divesting Asiana’s cargo business in order to address concerns that the acquisition would result in reduced competition between Europe and South Korea.
Then in August, Korean signed a “basic business sale agreement” with Air Incheon for Asiana’s cargo business. The sale is worth approximately $342m.
The agreement follows June’s announcement that Air Incheon had been named as the preferred bidder for the sale of Asiana’s cargo business.
The Commission said in a website news briefing on November 28 that it had approved the sale of Asiana’s cargo business to Air Incheon under the EU Merger Regulation.
“The European Commission has approved, under the EU Merger Regulation, Air Incheon as a suitable purchaser for the divestment business offered by Korean Air Lines Co., Ltd (‘Korean Air’) in order to acquire control over Asiana Airlines Inc. (‘Asiana’),”said the Commission.
The Commission found that Air Incheon fulfilled the relevant criteria of: being independent from Korean Air and Asiana; having the financial resources, proven expertise and incentives to maintain and develop the divestment business as a viable and active competitive force in competition with the parties and other competitors; being a South Korean airline with an existing Air Operator’s Certificate and a hub at Incheon airport; and the divestment not raising at first sight competition concerns or risks in delaying the implementation of the commitments.
The agreement is still subject to review by the US, but Korean said in January that it expects to complete the acquisition of Asiana this year.
Air Incheon, established in 2012, is the only South Korean airline entirely dedicated to freighter cargo transport. The sale of Asiana’s cargo business includes freighter aircraft, slots, traffic rights, flight crew, and other employees, as well as customer cargo contracts.
Korean first announced its plan to acquire Asiana in November 2020, but the acquisition proceedings were delayed by the Covid pandemic and resulting disruption in the airline industry.
Then last year, the plan sparked concern by the Commission, which said the takeover would result in reduced competition between Europe and South Korea because the two carriers dominate the long-haul market to and from South Korea. Korean also struggled to gain approval for the deal in Japan and the US.
To secure regulatory approval from Brussels for the move, Korean offered to sell Asiana Airlines’ cargo business in October 2023.
In December 2023, European Union competition regulators set a February 2024 deadline to review Korean’s proposed acquisition of Asiana after the two airlines resubmitted their plans to EU antitrust regulators.
