South Korean budget airlines submit bids for Asiana cargo unit, source says
South Korean budget airlines submit bids for Asiana cargo unit, source says
FILE PHOTO: Aircraft flies over the head office of Asiana Airlines in Seoul July 7, 2013. REUTERS/Kim Hong-Ji/File Photo
SEOUL: Four South Korean low-cost airlines have made offers for Asiana Airlines' cargo division, according to a source with knowledge of the situation who spoke on Wednesday.
According to the source, Jeju Air, Eastar Jet, Air Premia, and Air Incheon all made non-binding bids.
The largest airline in South Korea, Korean Air, is scheduled to pay roughly $1.4 billion to acquire nearly two-thirds of Asiana. However, EU antitrust authorities have mandated that Asiana sell its cargo division prior to their final approval of the agreement.
Commentary was declined by Korean Air, Asiana, Air Premia, and Eastar Jet.
It was not possible to immediately get in touch with Jeju Air and Air Incheon representatives for comment.
If Asiana were to acquire the cargo unit, all of its freighter aircraft, airport slots, staff, and contracts would be included.
The amount of Asiana's debt that the buyer would assume, how the pricing will reflect post-pandemic decreases in freight prices, and the age of Asiana's fleet are all significant problems that are expected to come up in any sale negotiations, according to two other sources with knowledge of the topic.
Commentary was declined by Korean Air, Asiana, Air Premia, and Eastar Jet.
It was not possible to immediately get in touch with Jeju Air and Air Incheon representatives for comment.
If Asiana were to acquire the cargo unit, all of its freighter aircraft, airport slots, staff, and contracts would be included.
The amount of Asiana's debt that the buyer would assume, how the pricing will reflect post-pandemic decreases in freight prices, and the age of Asiana's fleet are all significant problems that are expected to come up in any sale negotiations, according to two other sources with knowledge of the topic.
All of the sources declined to be named because they were not authorized to talk to the media about the agreement.
Given the debt problem, analysts have stated that estimating the unit's value is difficult. As of the end of September, Asiana owed over 12.7 trillion won ($9.5 billion), per a company filing.
Approximately 25% of South Korea's international air freight business is made up of Asiana. It operates 21 routes to 25 destinations across 12 countries, including the US, Germany, and Russia, using 11 cargo aircraft.
In recent months, there has been a wave of consolidation in the airline industry. Lufthansa is attempting to acquire a 41 percent share in Italy's ITA Airways, while British Airways and Iberia's owner, IAG, is attempting to acquire the remaining 80 percent.
Given the debt problem, analysts have stated that estimating the unit's value is difficult. As of the end of September, Asiana owed over 12.7 trillion won ($9.5 billion), per a company filing.
Approximately 25% of South Korea's international air freight business is made up of Asiana. It operates 21 routes to 25 destinations across 12 countries, including the US, Germany, and Russia, using 11 cargo aircraft.
In recent months, there has been a wave of consolidation in the airline industry. Lufthansa is attempting to acquire a 41 percent share in Italy's ITA Airways, while British Airways and Iberia's owner, IAG, is attempting to acquire the remaining 80 percent.
It doesn't now own any of the Spanish carrier Air Europa.
Competition regulators have given Korean Air the all-clear for the Asiana acquisition in 13 out of 14 jurisdictions. It is currently awaiting an American ruling.
($1 = 1,336.1100 won)
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