Korean Air Submits Asia Air Integration Strategy... Focus on Job Security and Streamlining Overlapping Businesses

As the court's decision on Korean Air's acquisition of Asiana Airlines approaches, on the 30th, Korean Air and Asiana Airlines passenger planes were moving toward the runway at Gimpo Airport apron in Gangseo-gu, Seoul. The Seoul Central District Court is expected to deliver a ruling today or tomorrow on the injunction request filed by the activist private equity fund KCGI against Hanjin KAL to prohibit the issuance of new shares. If the court dismisses the injunction request, the acquisition process will accelerate, but if the injunction is granted, the acquisition is likely to be canceled. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Dongwoo Lee] Korean Air submitted a post-merger integration (PMI) plan to the Korea Development Bank on the 17th following its acquisition of Asiana Airlines. The integration plan includes measures to maximize synergy, such as employment stabilization, restructuring of overlapping businesses, and integration among low-cost carrier (LCC) subsidiaries.

According to industry sources, the PMI submitted confidentially by Korean Air on this day specifies detailed measures regarding employment stability for Asiana Airlines' existing workforce. This follows Hanjin Group's prior statement that there would be "no artificial restructuring" before the integration, with opinions raised on the need to formalize this commitment.

Korean Air estimates that the workforce involved in overlapping businesses between the two companies is between 800 and 1,000 employees, and plans to prioritize blocking employment insecurity by appropriately allocating personnel to new businesses and other areas.

Solutions to concerns about monopolistic practices through restructuring of overlapping businesses were also reportedly proposed. Previously, it was pointed out that after the merger, 32 international routes?accounting for 22.5% of the total?would have a flight share exceeding 50%, raising the possibility of fare increases.

An industry official stated, "To minimize consumer harm such as potential fare hikes after the merger, the plan is understood to include government-led measures to limit the extent of fare increases."

Additionally, Korean Air is considering integrating LCCs such as Air Busan and Air Seoul centered around Jin Air. This is to prevent Air Busan from becoming a sub-subsidiary upon the integration of Korean Air and Asiana Airlines.

Korean Air plans to finalize the acquisition process by paying a 400 billion KRW interim payment for Asiana Airlines within the first quarter of this year upon PMI approval from KDB Industrial Bank, which is expected to take about a month, and completing the remaining 1.5 trillion KRW capital increase within the first half of the year.

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