Seoul, Dec 12 Korean Air, South Korea's biggest airline, has successfully integrated local rival Asiana Airlines as a subsidiary, wrapping up a years-long acquisition process, the company said on Thursday.
Korean Air spent 1.5 trillion won ($1.04 billion) to acquire 131.57 million new shares issued by Asiana to take over the country's second-largest full-service carrier in the 1.8 trillion-won merger deal.
The acquired Asiana shares account for 63.88 percent of the total, Korean Air said in a statement.
Korean Air initially announced its plan to acquire the debt-laden carrier in November 2020. It had then invested 300 billion won to purchase Asiana's perpetual convertible bonds as its first step.
The company concluded the share acquisition process Wednesday after recently securing all necessary approval from antitrust regulators in 14 countries and regions, including the European Union.
To secure the approvals, the company made some concessions to the competition watchdogs, including selling Asiana's cargo business division and handing routes to other carriers.
Korean Air will absorb Asiana after a two-year post-merger integration (PMI) process, while its budget carrier unit Jin Air Co. will absorb Asiana's low-cost units Air Seoul Inc. and Air Busan Co., a company spokesperson said by phone.
Asiana, Air Seoul and Air Busan will no longer exist after the PMI program is finalised, the spokesperson added.
To maximize business synergies, the integrated Korean Air will diversify time slots on overlapping routes and add new destinations, while maintaining the current workforce after the PMI period, the statement said.
The company expected the enlarged Korean Air will become the world's 12th-largest carrier by revenue passenger kilometer, a measure of the volume of passengers carried by an airline.
It also plans to submit the conversion ratio of mileage points between the two carriers to the Fair Trade Commission (FTC) by June next year for review.
Asiana plans to hold an extraordinary shareholders meeting on Jan. 16 to appoint new board directors nominated by Korean Air, the statement said.
Also on Thursday, the FTC ordered some corrective measures as a condition for Korean Air's acquisition of Asiana to address competition concerns.
The main conditions include a requirement for the two carriers to maintain at least 90 percent of the seating capacity offered before the merger on key routes.
To mitigate potential competition issues, the FTC has mandated that the airlines ensure seat availability on 40 routes does not fall below 90 percent of their 2019 levels.
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