Korean Air to Integrate Operations After Managing Asiana Subsidiaries... "No Forced Restructuring" (Comprehensive)

Yangsa Union Tension "Korean Air Also Has Significant Debt, Now Asiana Too... Concerns"

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] Hanjin Group is embarking on building a mega carrier that ranks among the world's top 10 airlines through the acquisition of Asiana Airlines. After acquiring Asiana Airlines, Korean Air plans to operate it as a subsidiary for the time being to normalize operations, and ultimately aims to undergo a post-merger integration (PMI) process to become a single company.

According to industry sources on the 16th, Hanjin Group plans to have Korean Air invest 1.8 trillion won to acquire Asiana Airlines by early next year and organize it as a subsidiary. The governance structure will be established as 'Hanjin KAL → Korean Air → Asiana Airlines → Air Busan and other subsidiaries.'

However, it is assessed that there is still a long way to go before complete integration. First, restructuring issues may surface. The combined debt of both companies exceeds 30 trillion won, and due to the impact of the COVID-19 pandemic, sales have plummeted, causing the majority of employees to enter paid and unpaid leave.

Within the aviation industry, it is expected that Hanjin Group will address overlapping business elements after completing the acquisition. Representative examples include sales organizations such as branches located domestically and overseas, and overseas business divisions. Route restructuring is also expected to become visible. Currently, 11 out of 12 (91%) of the trans-Pacific and European routes owned by Asiana Airlines overlap with routes operated by Korean Air. Some routes even overlap by only 20 to 30 minutes in departure times.

An industry official stated, "Frequency is beneficial when it is high, and considering competitiveness during the post-COVID-19 demand recovery period, a large-scale route reduction is unlikely. We believe that by restructuring through methods such as changing flight times after discussions with authorities, sufficient synergy effects can be achieved."

Korean Air has stated that "there will be no artificial workforce restructuring." Even considering overlapping elements between the two companies, the related workforce amounts to about 750 employees, and this number can be offset by natural attrition such as retirements. Particularly, the active involvement of financial authorities like KDB Industrial Bank in the acquisition also reduces the likelihood of workforce restructuring. A financial sector official said, "It is highly likely that the Industrial Bank of Korea discussed the sale with Korean Air with restructuring issues in mind."

However, employees from both companies are expressing anxiety about potential workforce restructuring. Six labor unions from both companies held an emergency meeting on the 16th to discuss countermeasures. A representative from one of the six unions said, "Korean Air also has significant debt, so we are not sure if it is a reasonable decision to acquire Asiana Airlines, which carries a debt of 12 trillion won. Although the two companies may create synergy after the acquisition, given the ongoing COVID-19 situation, a 'time of hardship' is inevitably approaching."

This content was produced with the assistance of AI translation services.