European Commission Approves Korean Air-Asiana Merger with Conditions Attached

The European Union (EU) Competition Authority (EC) has conditionally approved the merger of Korean Air and Asiana Airlines.

With this, the merger has been approved in 13 out of 14 countries, leaving the United States as the lone exception.

Late in the afternoon of the 13th, the EC posted on its website that it conditionally approved the merger of Korean Air and Asiana Airlines.

However, the EC has set conditions, including separating and selling Asiana Airlines’ cargo business and transferring four overlapping European routes.

Previously, Korean Air had sold off the cargo business division of Asiana Airlines, which accounts for 20% of its sales, for the merger.

In November of last year, the sale of the cargo business was approved at a board meeting of Asiana Airlines, and a corrective action plan was submitted to the European competition authorities last month.

In the industry, there was a positive outlook on the EC’s approval of the merger between Korean Air and Asiana Airlines.

With this, the United States, out of a total of 14 countries, remains the only one to approve the merger. It is predominantly expected that the review by U.S. authorities will not be difficult.

However, it is reported that the U.S. Department of Justice (DOJ) has raised concerns about monopolies on five of the 13 routes operated by Korean Air and Asiana Airlines in the Americas.

Korean Air will reportedly transfer these routes to other airlines to alleviate monopoly concerns.

Previously, the DOJ had filed a lawsuit in federal court regarding the merger of two U.S. airlines, JetBlue and Spirit. There have been cases where the federal court has sided with the DOJ.

This can be a challenge for Korean Air.

Currently, Korean Air argues that its overlapping routes with Asiana Airlines are only in five locations. In comparison, the merger between JetBlue and Spirit had overlapping routes in over 150 locations, and the fact that they were domestic companies became an issue in the merger review.

“Once the merger approval is completed, we will participate in Asiana Airlines’ paid-in capital increase and incorporate it as a subsidiary,” a Korean Air official told Alphabiz. “The merger will be finalized this year,” it added.