Korean Air looking for potential acquisition with rival Asiana Airlines
South Korea’s Hanjin Group, owner of the nation’s largest airline Korean Air Lines Co Ltd , is in talks to acquire debt-ridden Asiana Airlines Inc, local media reported on Thursday, citing unnamed investment banking sources.
The Korea Economic Daily said Hanjin Group has been in talks with Korea Development Bank (KDB) and will be submitting a letter of intent to the bank next as early as next week.
Hanjin Group told Reuters nothing has been decided, while Asiana Airlines said they were not aware of such talks.
Asiana’s lead creditor KDB said in an emailed statement talks with Hanjin Group was one of the options under consideration but also said that nothing had been decided.
Previous sale of Asiana in September with Hyundai group fell short
Shares of Asiana Airlines jumped as much as 25.6% to hit a near seven-month high, Korean Air rose as much as 6.5% in morning trade. Shares of Hanjin Kal, the holding company of Hanjin Group, were down 8.5% versus a 0.2% fall in the broader KOSPI as of 1256 GMT.
“The sale itself is a good news for Asiana Airlines … Korean Air will likely benefit from the country’s No. 2 full service carrier dropping out of competition, while the integration may bring positive outcomes for South Korea’s aviation industry,” said Lee Han-joon, an analyst at KTB Investment & Securities.
A planned sale of Asiana Airlines, South Korea’s second-largest carrier, collapsed in September. Hyundai Development Co and brokerage Mirae Asset Daewoo had agreed in December 2019 to purchase control of Asiana Airlines for about 2.5 trillion won ($2.25 billion), but they called for better terms after the airline’s debt surged after the coronavirus pandemic hit travel demand.