SEOUL - The auction for the sale of Asiana Airlines Inc.'s cargo division is scheduled to start on Tuesday, marking a significant step towards the completion of its merger with Korean Air Co. This follows the conditional approval from the European Union's antitrust regulator, according to industry insiders. The European Commission (EC), the executive arm of the EU, granted conditional approval for the merger valued at 1.8 trillion won ($1.4 billion), first announced in 2020, after evaluating the submission by Korean Air.
According to Yonhap News Agency, Korean Air had agreed to divest Asiana's cargo business among other concessions to secure the EC's nod for the merger. UBS, overseeing the transaction, has initiated the bidding process by distributing information memoranda and non-disclosure agreements to interested parties. An airline official revealed that UBS is set to send out bid proposals to potential buyers by Wednesday, urging them to present their funding and business strategies post-acquisition by the month's end.
The list of potential bidders includes several low-cost and cargo-focused airlines such as Jeju Air Co., Eastar Jet Co., Air Premia Inc., and Air Incheon, with the latter two expressing explicit interest in the acquisition for expansion purposes. Meanwhile, Jeju Air and Eastar have opted not to comment on the matter.
Korean Air is poised to select the purchaser for Asiana's cargo business by October, contingent on receiving the EC's approval for the chosen buyer to finalize the merger. Asiana's cargo division, which comprises 11 aircraft, including three leased ones, generated 1.6 trillion won ($1.2 billion), accounting for 25 percent of its total sales last year. The sale price for the cargo division is projected to range between 500 billion won to 700 billion won.
In pursuit of the merger, Korean Air has sought clearance from antitrust regulators in 14 jurisdictions, securing approvals from 13, including a conditional agreement from the EU, with the decision from the United States still pending.