Korean Air has received conditional approval from European Union (EU) competition authorities for its merger with Asiana Airlines. Therefore, the sale of Asiana’s cargo business, a condition for the merger, is now on the right track.
According to investment banking and aviation industry sources on Feb. 20, UBS, the lead manager for the sale of Asiana’s cargo division, recently sent an information memorandum and a non-disclosure agreement to potential buyers. The potential buyers are four Korean low-cost carriers (LCCs) -- Jeju Air, Eastar Airlines, Air Premia, and Air Incheon. The acquisition is estimated to be worth between 500 and 700 billion won.
UBS will soon send requests for proposals to these companies. Interested parties have until the end of February to submit their bidding proposals, including financing plans and business plans.
LCCs currently in the running for acquisition are expected to utilize the financial resources of their respective largest shareholders or form consortia with strategic investors. Jeju Air is owned by AK Group while the largest shareholders of the other LCCs are private equity firms such as VIG Partners (Eastar Jet), JC Partners (Air Premia), and Socius (Air Incheon).
Korean Air, as a seller, plans to select potential buyers from bidders and implement a full bidding process. Korean Air is expected to finalize preparations for the sale of Asiana’s cargo division including selecting bidders and a winner by October at the latest.
Asiana Airlines’ cargo division, which ranks second in Korea, currently operates 11 freighters -- eight owned and three leased. In 2023, it generated 1.6071 trillion won (US$1.2048 billion) in revenue, accounting for 24.6 percent of Asiana Airlines’ total revenue.