Due to Delay in FTC’s Review of Business Combination
Korean Air has postponed its acquisition of Asiana Airlines’ stocks again due to a delay in the Fair Trade Commission (FTC)’s review of a business combination between the two airlines.
Korean Air announced on Sept. 30 that it has extended the deadline for acquiring Asiana Airlines shares by three months again due to a delay in reporting a business combination. The deadline was extended to Dec. 31.
Korean Air initially planned to participate in Asiana Airlines' 1.5 trillion won capital increase on June 30 to acquire a 63.9 percent stake, but it had to postpone the acquisition date by three months to Sept. 30 due to a delay in corporate combination reviews in major countries.
Korean Air's acquisition of Asiana Airlines shares could be delayed to next year, as corporate combination reviews by the FTC and overseas fair competition authorities are highly unlikely to end by the end of 2021. In January, Korean Air reported a business combination to fair competition watchdogs in nine essential reporting countries, including Korea, the United States, and the European Union. So far, it has won approval from Turkey and Taiwan.
According to the FTC, some foreign countries expressed concern over the overlapping routes of the two airlines, saying that it is difficult to unconditionally approve the merger because market competition may be restricted. Although the FTC did not disclose the countries which expressed such concerns, the United States and the EU reportedly showed a negative stance.
The FTC and overseas fair competition authorities are likely to approve the airlines’ combination on the condition that Korean Air adjusts its routes. The Korean Ministry of Land, Infrastructure and Transport is likely to recover Korean Air's transportation rights and slots and redistribute them to low-cost carriers (LCCs).