Korean Air Lines Co. passenger aircraft on the tarmac at Incheon International Airport in Incheon, South Korea.
SeongJoon Cho/Bloomberg
South Korea’s flag carrier Korean Air Lines has acquired a controlling stake in Asiana Airlines for about $1 billion, combining the country’s biggest and second-largest airlines.
Korean Air, controlled by the Cho family’s Hanjin KAL holding company, bought 131,578,947 newly issued shares of Asiana for almost 1.5 trillion won (about $1 billion), Asiana said in a regulatory filing Thursday. The shares are equivalent to a 63.88% stake in Asiana and the company is now a subsidiary of its once-larger rival. The two airlines will be integrated into one airline that retains the Korean Air name in two years.
The previous top shareholder in Asiana, with a 30.77% stake, was Kumho Engineering & Construction, controlled by Park Sam-koo’s Kumho Buslines. Kumho Engineering & Construction now owns a 11.12% stake in Asiana after the dilution caused by the issuance of new shares. The Kumho group, which started as a transportation company, launched Asiana in 1988 and was known for its fine service.
The acquisition was first struck in November 2020 to rescue debt-laden Asiana during the pandemic, but was delayed due to competition concerns. To appease regulators around the world, Korean Air had to give up routes to other airlines such as domestic low-cost carrier T’way Air and sell off assets like Asiana’s cargo business to local rival Air Incheon.
Asiana Airlines Airbus A380 at Los Angeles international Airport.
FG/Bauer-Griffin/GC Images
The Kumho group itself has been struggling with debt from an aggressive deal spree more than a decade ago, including the disastrous $7 billion acquisition of Daewoo Engineering & Construction in 2006, which crippled the conglomerate during the 2008 global financial crisis.
Besides aviation, Hanjin KAL’s businesses also include container terminals, the Grand Hyatt Incheon hotel and information systems, such as airline reservation and ticketing systems. Hanjin KAL is led by chairman and CEO Walter Cho.