In a major shake-up of the global airline industry, the owner of Korean Air has announced a $1.62 billion takeover bid for embattled rival Asiana Airlines.
According to the details, South Korean flag-carrier Korean Air said on Monday it will buy out its smaller troubled rival Asiana Airlines in a W1.8 trillion ($1.62 billion) won deal as it looks to consolidate with the coronavirus pandemic sending shockwaves through the global aviation sector.
“We realized that without restructuring in the aviation industry it is unclear whether the flag carriers would survive even after the coronavirus pandemic ends,” state-run lender Korean Development Bank (KDB) said in a statement.
“With the deal, the integrated flag carrier will be one of the top 10 global airlines,” the bank added.
The main goal of the acquisition is to stabilise South Korea’s aviation industry amid the coronavirus pandemic and improve its competitiveness, said Hanjin Group. The merger should streamline route operations and lower costs, while the consolidation of slots at Seoul’s Incheon International Airport may increase joint ventures with global airlines and demand for transit flights, the parent company said.
Airlines around the world have been plunged into crisis because of the coronavirus and its impact on travel. Founded in 1988 to compete with Korean Air, Asiana flew to 61 cities in 21 countries prior to COVID-19.
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