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Panorama view of Asiana Airlines headquarters. (Photo = Asiana Airlines) |
[Alpha Biz= Reporter Kim Sangjin] Asiana Airlines has already spent more than half of the deposit received for its merger with Korean Air, just four months after agreeing to divest its cargo business to persuade the European Commission (EC).
According to Asiana Airlines' quarterly report on the 21st, it has withdrawn an additional 150 billion won from the 700 billion won deposit received as part of the merger and acquisition (M&A) agreement with Korean Air this year. Last November, following Korean Air's submission of a corrective action plan to the EC for the merger with Asiana Airlines, 250 billion won had already been used. This brings the total withdrawals to 400 billion won. The deposit, which was classified as short-term financial products, decreased from 727 billion won at the end of September 2023 to 334.9 billion won by the end of March this year, including interest income.
Asiana Airlines is actively utilizing the liquidity provided by Korean Air. The initial deposit of 700 billion won was received in November 2020 when Korean Air agreed to purchase new shares worth 1.5 trillion won from Asiana Airlines. However, the protracted antitrust review by foreign regulatory authorities prevented Asiana from using the deposit.
In November last year, Korean Air allowed partial withdrawal of the deposit before the transaction's completion to persuade Asiana Airlines, following its submission of the corrective action plan to the EC. In February this year, when the EC conditionally approved the merger, 150 billion won of the deposit was converted into a performance bond, relieving Asiana Airlines of the obligation to return it. If the merger is not approved, the remaining 250 billion won will convert into debt, with up to 220 billion won potentially convertible into perpetual convertible bonds.
Therefore, even if the merger does not proceed, Asiana Airlines is relieved of the immediate obligation to return the deposit to Korean Air. As of the end of March this year, Asiana Airlines' cash and cash equivalents stood at 761.1 billion won, a 144% increase from 312.5 billion won at the end of last year.
Among the three bidders—Air Premia, Air Incheon, and Eastar Jet—a preferred bidder for the cargo business is expected to be selected soon.
AlphaBIZ Kim SangJin(letyou@alphabiz.co.kr)
