Exclusive-Korean Air-Asiana deal set to win EU antitrust nod, sources say

By Foo Yun Chee

BRUSSELS (Reuters) -Korean Air is expected to win EU antitrust approval to buy Asiana Airlines after the companies pledged to sell the latter’s cargo unit and divest routes to four European cities, two people with direct knowledge of the matter said.

The Korean deal underscores a wave of consolidation in the airline sector, with Lufthansa seeking a 41% stake in Italy’s ITA Airways and British Airways and Iberia owner IAG aiming to buy the remaining 80% of Spanish carrier Air Europa it does not already own.

Korean Air, South Korea’s biggest carrier, in late 2020 said it planned to spend 1.8 trillion won ($1.37 billion) to become the top shareholder of indebted Asiana.

It submitted the remedy offer in November last year, with the proposed cargo business sale a significant departure from the usual airline remedies of airport slots and access to frequent flyer programmes.

South Korean budget airline T’way Air is expected to acquire Asiana’s cargo business after EU competition officials made it clear that they would prefer an Asian, preferably a Korean rival, to be the buyer, the people said.

Passenger routes to be divested are those to Barcelona, Frankfurt, Paris and Rome, they said.

The Commission declined to comment. It has beefed up its approach towards air mergers after previously approved deals led to price hikes despite remedies to address their concessions.

Korean Air said that after comprehensive discussions it had submitted remedies that can address the EC’s concerns.

“We will continue our efforts to secure the approval from the EC and the remaining regulatory bodies,” it added.

The deal also needs approval from the United States and Japan. The UK competition watchdog cleared the deal last year after the carriers agreed to help Virgin Atlantic Airways develop air passenger and air cargo services on the London-Seoul route.

($1 = 1,310.4200 won)

(Reporting by Foo Yun Chee; additional reporting by Heekyong Yang in Seoul; editing by Jason Neely, Kirsten Donovan)