- Korean Air Lines Co Ltd (KRX: 003490) announced it is buying Asiana Airlines Inc (KRX: 020560) for 1.8 trillion won ($1.6 billion). These are the details.
Korean Air Lines Co Ltd (KRX: 003490) announced it is buying Asiana Airlines Inc (KRX: 020560) for 1.8 trillion won ($1.6 billion). The combination of the two biggest airlines in South Korea is expected to make Korean Air one of the world’s top 10 airlines.
“In general, countries with a population less than 100 million have a single full service carrier,” said Korean Air’s parent company Hanjin in a statement. “However, Korea has two full service carriers, which gives it a competitive disadvantage compared to countries like Germany, France and Singapore with a single major airline.”
This merger is also expected to improve route operations and lower costs. And it will also increase the Korean Air fleet and capacity.
Korean Air is going to issue new shares in early 2021 in order to raise 2.5 trillion won. And Hanjin Kal will participate in the issue after it received 800 billion won from Korea Development Bank, which will be transferred to Korean Air.
“Korean Air’s initial investment will enable Asiana Airlines to secure the funding needed for operations until the end of the year, as well as improve its financial position by adding 300 billion won worth of perpetual convertible bonds to its capital assets,” added Hanjin.