Korean Air, the flag carrier of South Korea, seeks to purchase another Korean carrier Asiana Airlines in cooperation with the Korea Development Bank (KDB), local media reported.
On November 13, 2020, two different local media sources reported that the KDB, a creditor of Asiana Airlines, considered purchasing two South Korean air carriers. The most likely scenario of the acquiring process could be that the KDB, being a third party in the deal, would use a paid-in capital increase method and invest in Hanjin Kal, the parent company of Hanjin Group which is in turn the parent company of Korean Air. After the move, Hanjin Kal could acquire almost 31% stake of Asiana Airlines.
It is expected that Hanjin Group would send an official letter of intent between a period of November 16 – 22, 2020. As for now, none of the parties had signed any official agreement yet, local media reported. Besides, if Korean Air would acquire Asiana, some antitrust issues could appear as the airline would hold up to 75% shares of the passenger and cargo routes market.
The plan to sell Asiana Airlines initially arose back in April 2019, when the airline suffered a financial crisis. At the time, Kumho Asiana Group, the parent company of the airline, decided to dispose of its controlling take by selling almost 34% to avert Asiana’s liquidity crisis.
The most recent attempt to buy the airline was made by the HDC Hyundai Development Company in July 2020. However, the takeover failed and the KDB announced that the airline would be running by the creditor’s management system in September 2020.
Struggling Asiana Airlines has already used up 3.3 trillion won ($2.9 billion) that the airline secured from the state-owned banks. In September, the airline received additional government-backed support worth 240 billion won ($216 million).