SEOUL- As part of the new merger plan involving Korean Air (KE) and amid antitrust concerns in Europe, Asiana Airlines (OZ) is anticipated to explore the sale of its cargo business, as reported by industry sources on Sunday.
These sources have indicated that the forthcoming board meeting at the end of the month will likely address this matter.
Asiana Airlines To Stop Cargo Business
Amid Plans for Amended Merger Proposal, Asiana Airlines Contemplates Divesting Cargo Business. As Korean Air prepares to present a revised merger plan to the European Commission later this month, Asiana Airlines is considering the potential sale of its cargo business.
The original merger plan faced rejection from European regulators, who expressed concerns about reduced competition in cargo and passenger transport services between Europe and South Korea.
The strategic move to divest the cargo business could also play a crucial role in securing conditional approval from the United States and Japan.
Korean Air has already submitted documents to antitrust regulators in 14 countries, obtaining approval from 11 of them, with exceptions in the European Union, the United States, and Japan.
While Asiana Airlines has not officially commented on the matter, indicating that no decisions have been made regarding an upcoming board meeting or its agenda, industry sources predict that the meeting will be held in the coming weeks before the deadline for Korean Air’s submission of the new merger plan.
Merger With Korean Air
There are varying perspectives among the board members regarding the potential sale of Asiana Airlines’ profitable cargo business, contributing to 21.7 per cent of the company’s total sales in the first half of this year.
Some board members who support the sale of the cargo business are emphasizing the urgency of the Korean Air merger to offset an impending financial crisis. Conversely, others are concerned that selling the cargo business could diminish the company’s overall value and potentially damage trust.
Additionally, the public expression of concern by Asiana Airlines’ union adds to the complexities surrounding the disposal of the cargo business.
On the other hand, Korean Air is expected to submit a revised proposal to the European Commission, which may involve relinquishing four of its routes between Korea and Europe, possibly including flights between Incheon and Paris, Frankfurt, Rome, and Barcelona.
Korean Air is also contemplating the possibility of transferring the cargo business and the profitable Korea-Europe routes to domestic low-cost carriers to maintain the country’s competitive position in the aviation industry.
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