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[Alpha Biz=(Chicago) Reporter Kim Jisun] Controversy is brewing as Korean Air is trying to sell Asiana Airlines' cargo business, which has a high proportion of sales, in order to achieve a business combination with Asiana Airlines, which is in trouble.
According to the aviation industry and investment banks, Korean Air's corrective measures to submit to the European Commission (EC) by the end of this month includes selling the freight business and some European routes (Paris, Rome, Barcelona and Frankfurt from Incheon). Both of them were pointed out by EC as competition restrictions, and Korean Air, which is in urgent need of resolving monopoly concerns, seems to be making a winning move. It has been confirmed that Korean Air and others have contacted low-cost carriers (LCCs) in Korea to block controversy over the outflow of national wealth due to the overseas sale of Asiana Airlines' cargo business and routes.
As such information becomes known, there is a growing sense of crisis not only in the airline industry but also in the company. Asiana's labor union recently issued a statement against mergers and acquisitions.
Asiana Airlines' freight sales last year amounted to 2.9929 trillion won, accounting for 48% of its total sales. Some observers say that giving up Asiana Airlines' cargo sector will halve the synergy of the merger.
In fact, Cho's stake in the parent company Hanjin KAL, which controls Korean Air, is relatively weak, with only 5.78% and 19.79% held by the Cho family and related parties. Chairman Cho had a management dispute with Kang Sung-bu Fund and Bando Construction, which his sister Cho Hyun-ah, a former vice president of Korean Air, formed an alliance in 2019. At that time, Chairman Cho managed to protect his managerial rights by welcoming the Korea Development Bank, which invested 800 billion won (10.58% stake) in exchange for the acquisition of Asiana Airlines.
AlphaBIZ 김지선(stockmk2020@alphabiz.co.kr)
