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“EU Approves Merger of Korean Airlines, Clearing Path to Create Mega Carrier”
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입력 : 2024.02.27 09:55
ㅣ 수정 : 2024.02.27 10:01
Approval from the EU sets stage for final hurdle: US regulators' decisionLow-Cost Carriers Soar, Full-Service Carriers Adapt, and the Impending Mega Merger Shapes the Future of Air Travel
[SEOUL-News2day] In a long-awaited move, European Union regulators have given the green light to the merger of Korean air giants, Korean Air and Asiana Airlines.
The approval, granted on the condition of certain business concessions to address competition concerns, marks a significant milestone in the protracted process.
The EU's decision comes after a period of rigorous scrutiny, during which Korean Air held its breath, aware of the strict standards imposed by European regulators.
With this approval, the merger now awaits the final hurdle: clearance from US authorities. If approved, the consolidation would birth a "Mega Carrier," reshaping the global aviation landscape.
However, caution remains paramount. Korean Air must fulfill the merger conditions set by the EU and carefully monitor the stance of the remaining regulatory authority, the United States.
The intricacies of navigating these processes underscore the tension and uncertainty surrounding the merger.
According to Korean Air officials, the EU approval is contingent upon compliance with remedies agreed upon with the regulatory authorities.
The merger process, which began with preliminary discussions in January 2021, saw formal submission of documents in January 2023, followed by Phase 2 scrutiny announced in February of the same year.
Despite expectations of a final decision by August 2023, the process faced setbacks with the EU's issuance of a Statement of Objections, delaying the outcome.
In response, Korean Air submitted remedial measures to the EU, leading to the recent conditional approval based on actions such as the divestiture of Asiana Airlines' cargo business and support for new entrants on overlapping passenger routes.
The approval paves the way for Korean Air and Asiana Airlines to proceed with the divestment process for the cargo business and support entry by new airlines on overlapping passenger routes.
T'way Air has been designated as the Remedy Taker, set to enter select routes in the latter half of this year.
With EU approval secured, attention now turns to the crucial decision from US regulators, which has been indefinitely postponed by the Department of Justice (DOJ).
The DOJ intensified scrutiny last year, seeking specific measures to address concerns of monopolistic practices.
Amid uncertainties surrounding the US decision, speculations abound about potential legal challenges to block the merger.
Reports suggest that concerns about adverse effects on competition in passenger and cargo transportation between the US and Korea may prompt legal action.
In response, Korean Air aims to expedite discussions with US regulators following the EU approval, emphasizing the resolution of concerns through the divestiture of Asiana's cargo business.
Nevertheless, a significant challenge lies in smoothly concluding the divestment of Asiana's cargo business. Industry insiders anticipate imminent bids, with budget carriers like Jeju Air and Eastar Jet emerging as strong contenders.
With debts soaring to trillions of won as of the third quarter of 2023, Asiana Airlines faces financial prowess as a crucial criterion in the selection of a buyer for its cargo business. Strategies involving mobilization of major shareholders' funds or consortium formation with strategic investors are anticipated.
In light of these developments, attention also shifts to Hanjin Group Chairman, Won Tae Cho. His successful maneuver to gain control through the acquisition of Asiana Airlines as part of a three-party consortium in 2020 sets the stage for potential resolution of management disputes upon successful completion of the merger.
As Korean Air awaits the US regulatory decision, the aviation industry braces for further developments, with the merger's impact on competition and market dynamics under intense scrutiny.
By Soyeong Jeon, a reporter of News2day / jsy@news2day.co.kr
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