Korean Air to purchase Asiana Airlines for $1.6 billion

In what seems to be one of, if not the largest airline merger since Covid-19, Korean Air just agreed to purchase over $1.6 billion in Asiana stock, making it the largest shareholder on record and effectively purchasing controlling rights for the company.

According to the report from Reuters, the parent company of Korean Air agreed to purchase approximately a 64% share in the company and also a large chunk of Asiana’s convertible bonds. 

It’s no surprise that airlines have been struggling during Covid-19, with many foreign carriers struggling to keep up because of closures, quarantines, and passenger demand abysmally lower than last year.

Asiana A350 (image courtesy of Glenn Beltz flickr)

Merger? Acquisition? Both?

The Reuters article goes into great detail about the specifics of the ownership stakes and the various companies that are involved in the transaction, but above all one thing stood out. The companies are set to remain independent, for now, and operate as independent carriers.

“For the time being, Korean Air and Asiana will operate as independent affiliates, but once integrated, Asiana’s brand will be phased out,” a Korean Air spokeswoman told Reuters.

That’s great news for us recent fliers who have enjoyed benefits from both Skyteam (Korean Air) and the Star Alliance (Asiana), both having very unique award charts and travel opportunities.

Korean Business Class Seats

In the end, it’s always good to see some competition, and especially some alignment, as both carriers are able to pull in a certain subset of clients. I know I’d much rather have two options on a route than just one, especially to keep pricing competitive.

Potentially Huge Airlines

According to the Korea Herald, the new airline, if eventually merged, would be the 10th largest airline and 3rd largest cargo airline in the world.

Honestly, if you’d have asked me where Korean Air ranked on the world scale, I probably would not have put them for #4 in cargo and certainly not as high on the list for passengers. An eventually merged airline would be an asian powerhouse.

What are your thoughts Are you excited to see this potential merger?

Author: Jon Nickel-D'Andrea

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