South Korea’s Asiana Airlines said its board had approved the sale of the company’s cargo business – an important step towards allaying EU competition concerns about a proposed takeover by Korean Air Lines.
Korean Air, the country’s biggest carrier, said in a statement following the decision that it had submitted a package of remedies to the European Commission – remedies that also include divesting routes to some European Union cities.
In addition to the European Union, the acquisition plan needs approval from the United States and Japan.
“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,” Korean Air said in a statement.
Korean Air also said it will buy 300 billion won ($220 million) of convertible bonds issued by Asiana, part of fresh financial support to the smaller airline.
Asiana creditors, including state-run lender Korea Development Bank, have been looking for a new owner for the debt-laden carrier for several years. Korean Air agreed to acquire Asiana in 2020.
As of end-June, Asiana operated 11 cargo planes, according to a company filing. The cargo service has 21 routes to 25 cities in 12 countries around the world, including the United States, Germany and Russia. It held a 20.7% share of South Korea’s market for overseas cargo.
Shares in Asiana reversed earlier gains to trade down 7.4% following the news, underperforming a 1.7% rise for the benchmark KOSPI.
Source: Reuters.com