Korean Air to buy rival Asiana Airlines for $1.6 billion

Nov 16, 2020

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

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.

Sign up to receive the daily TPG newsletter for more airline news!

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.

Featured photo by Jung Yeon-Je/Getty Images.

Delta SkyMiles® Platinum American Express Card

Earn 50,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new card in the first three months of card membership. Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants in the first three months of card membership.

With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.

Apply Now
More Things to Know
  • Earn 50,000 Bonus Miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new Card in your first 3 months.
  • Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants with your card within the first 3 months of membership.
  • Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
  • Earn 3X Miles on Delta purchases and purchases made directly with hotels.
  • Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
  • Earn 1X Miles on all other eligible purchases.
  • Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
  • Enjoy your first checked bag free on Delta flights.
  • Fee Credit for Global Entry or TSA Pre✓®.
  • Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
  • No Foreign Transaction Fees.
  • $250 Annual Fee.
  • Terms Apply.
  • See Rates & Fees
Regular APR
15.74%-24.74% Variable
Annual Fee
Balance Transfer Fee
Recommended Credit
Terms and restrictions apply. See rates & fees.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.