Korean Air to buy rival Asiana Airlines for $1.6 billion
Early on Monday, the owner of South Korea's flag carrier Korean Air announced that it will spend 1.8 trillion won ($1.6 billion) to take over rival carrier Asiana Airlines.
Once Korean becomes Asiana's largest shareholder with a 63.9% stake, the combined airline will become "one of the top 10 airlines" in the world by size, according to Korean Air.
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The Hanjin Group, which owns Korean Air, plans to raise 2.5 trillion won via rights offerings in 2021. Of that, it will spend 1.5 trillion won to buy new shares sold by Asiana, as well as 300 billion won in Asiana perpetual bonds. Hanjin Group will accept 800 billion won in rights offerings and convertible bonds from the Korea Development Bank, which is the main creditor of Asiana Airlines.
In a statement, Hanjin said the deal to acquire Asiana will "stabilize the Korean aviation industry, which is suffering from the COVID-19 pandemic."
"The company made the decision to help the country's airline industry continue to grow (amid uncertainties) and minimize the injection of public funds (into Asiana)," Korean Air Chairman Cho Won-tae said in a statement.
The current plan is for the two airlines to remain as separate and unique full-service brands. In a statement, Hanjin said that the two brands would give "a competitive disadvantage compared to countries like Germany, France and Singapore with a single major airline."
The group, however, plans to integrate the combined airlines' three low-cost carriers — Jin Air Co., which is owned by Korean Air, Air Busan Co. and Air Seoul Inc., both of which are owned by Asiana.
Before becoming finalized, the deal must be approved by Korea's anti-trust regulator.
Looking at the fleets of the two airlines, there are plenty of similarities — especially when it comes to their long-haul operations. Both airlines operate the Airbus A380 — Korean has 10 and Asiana has six — though the fleet largely remains grounded for both carriers. Similarly, both also have the other superjumbo, the Boeing 747 in their fleets, with different plans for the future of the aircraft and its retirement.
Elsewhere in the long-haul fleet, both airlines have Airbus A330 aircraft — Korean has 29 and Asiana has 15 — and Boeing 777 aircraft — Korean has 54 and Asiana has nine. However, their next-generation fleet of aircraft has been where the two have gone in different directions.
Korean Air went the route of the Boeing 787 Dreamliner. The airline now has a total of 10 of them in its fleet. Asiana, meanwhile, opted for the Airbus A350. It currently has 11 of the aircraft in its fleet.
Related: Where to sit when flying Korean Air’s 787-9 in economy
It's worth noting, too, that the acquisition could mean good news for Delta Air Lines and its flyers. Korean Air is a member of the SkyTeam alliance, of which Delta also belongs. Additionally, Delta owns a 10% stake in the Hanjin Group, as well as a pre-existing joint venture partnership with Korean Air.
Asiana, meanwhile, is a member of the Star Alliance. It remains to be seen exactly what will happen with Asiana's membership in the alliance, however, it's likely that under Korean's ownership, SkyTeam will be getting a new member.
Asiana had a history of financial uncertainty, which grew because of the COVID-19 pandemic and its effect on the aviation industry. In June, the airline revealed that its debts exceeded $11 billion. Because of its financial hardships, there had been reports that the airline would be sold.
In September, Asiana's creditors ended a deal that would see the airline be sold to a consortium led by HDC Hyundai Development Co. That deal fell through, however, over a disagreement about the terms and the pandemic's effect on Asiana and the airline industry.
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| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
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There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.