November 26, 2024

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Asiana Airlines' aircrafts at Incheon International Airport (Yonhap)

The board of Asiana Airlines, the nation’s second-largest air carrier, on Thursday approved a plan to sell off the company’s cargo business, a decision widely seen as crucial for its high-profile merger with its bigger rival Korean Air.

Asiana said in a regulatory filing that its board approved the sell-off plan. Korean Air said in the afternoon that the company had immediately submitted its revised merger plan, including Asiana’s cargo unit sell-off, to the European Commission.

The decision came three days after the five-member board failed to reach an agreement even after almost eight hours of heated discussions.

They met again earlier Thursday, in which four out of five members participated. The decision was reached in a 3-1 vote.

In May this year, Europe's antitrust regulators delayed its decision on the 1.8 trillion won ($1.3 billion) Korean Air-Asiana merger, saying the merger could restrict competition in the markets for passengers and cargo transport services between the EU and Korea.

To ease monopoly concerns, Korean Air decided to submit its remedies, which include the sale of Asiana’s cargo business and a plan to divest its four routes connecting European cities. On Tuesday, the company said its board approved the revised plan, saying it also plans to acquire new stocks worth 1.5 trillion won if the cargo business sale goes through.

Thursday’s board approval, however, does not remove several obstacles to completing the merger deal. Asiana’s union is still against the sale of the lucrative cargo business. Possibly reflecting investor concerns, Asiana shares closed almost 9 percent lower on the day compared to the previous trading day.

As of the first half of 2023, cargo business made up 24 percent of Asiana’s sales, second only to sales from transporting international passengers (62 percent).

Out of the 14 countries from which Korean Air needs approval to close the merger deal, 11 countries, Britain, China and Australia, have approved it. It is still awaiting a decision from the EU, the US and Japan.

By Shim Woo-hyun (ws@heraldcorp.com)