Asiana to sell cargo biz to help Korean Air win EU approval for takeover
Asiana Airlines Inc., South Korea's second-largest air carrier, said Thursday its board approved a plan to sell the company's cargo business, in a decision that could help Korean Air Co. win antitrust approval from European Union regulators for its takeover of the rival.
In a regulatory filing, Asiana announced the board's decision, noting it as a part of remedial measures for Korean Air to be submitted to the European Commission to win approval for the merger.
The decision came three days after the board of directors failed to reach a conclusion amid disagreements over the sell-off of the business division.
Thursday's decision was reached in a 3-1 vote, with one abstention, among Asiana's five-member board of directors. The board originally had six directors but one of two internal members, who was reportedly against the cargo division sale, had resigned.
The EC has raised concerns that Korean Air's acquisition of Asiana may restrict competition in the markets for passenger and cargo air transport services between the EU and South Korea.
A rejection of the cargo division sale could have potentially dampened the prospects of the merger deal, which has been pursued for the past three years.
Korean Air said it has submitted its remedies for the merger, which include Asiana's cargo business sale plan, to the EC following the decision by Asiana's board of directors.
"While Korean Air continues its efforts to secure the approval from the European Commission, the airline will also communicate closely with the remaining regulatory bodies to finalize the approval process as quickly as possible," the company said in a statement sent to Yonhap.
Despite the cargo business sale approval, an immediate approval of the merger by the EC is not guaranteed, but the chances of obtaining a conditional approval are expected to increase.
The search for a potential buyer of the cargo business also remains a major task for Korean Air.
Among industry insiders, four domestic low-cost carriers -- T'way Air, Eastar Jet, Air Premia and Air Incheon -- have been mentioned as potential buyers. Whether the companies will actually purchase Asiana's cargo business, however, remains to be seen.
Korean Air has so far received approval in 11 countries, including Britain, Australia and Singapore, but has yet to receive approval from three key markets: the EU, the United States and Japan.
Despite Asiana's cargo business sale decision, Korean Air still faces an uphill battle in completing the merger deal, as the US Department of Justice is reportedly considering suing to block the deal due to competition reasons in the US market.
The strong opposition by Asiana's union also stands as a hurdle for the company. Unionized workers have opposed the cargo business sale citing concerns of possible layoffs.
To alleviate such concerns, Korean Air said the merger will be pursued under the condition of retaining the employment of workers under Asiana. (Yonhap)