Air Incheon (KJ, Seoul Incheon) has won the rights to acquire Asiana Airlines' cargo business after being selected as the preferred bidder in a three-way race between it, Air Premia and Eastar Jet. The outcome is something of a surprise as Air Premia had been the fancied favourite.
Asiana is selling its cargo business as part of its proposed merger with Korean Air. That airline wants to buy a 63.9% stake in its smaller rival and fold the Asiana brand, assets, and employees into its own operations. However, the plan has encountered pushback from antitrust authorities. Agreeing to sell the cargo business, which includes eleven freighters, slots, air rights, and employees, was a condition of securing European Commission merger approval.
In a June 17, 2024, statement, Korean Air said Air Incheon had emerged as the preferred bidder based on several key criteria, including the certainty of completing the transaction, the ability to maintain and enhance the long-term competitiveness of the air cargo business, and the capability to mobilise funds through a competent financing consortium.
Preferred bidder status grants Air Incheon priority negotiation until July 15, 2024 (extended to July 31 upon mutual agreement between the parties). Air Incheon is believed to be paying around KRW500 billion won (USD362.5 million).
As previously reported in ch-aviation, Air Incheon will tap its largest shareholder, Socius Capital, for support. Also financing the bid are Korea Investment Partners, machinery manufacturing company Inhwa Precision, Korea Investment & Securities Company, and Shinhan Securities.
“The preferred bidder was selected through a comprehensive evaluation of all factors crucial to the growth of the air cargo industry, a key national industry, while maintaining the existing competitive environment,” said a Korean Air spokesperson. “We are committed to quickly finalising the sales process through flexible negotiations and completing the acquisition of Asiana Airlines."
If the acquisition finalises, Air Incheon, which recorded revenues of around KRW70 billion (USD50.7 million) in 2023, will become Korea's second largest cargo carrier. The airline presently operates four B737-800(SF)s on scheduled cargo flights from Seoul Incheon to Chengdu Shuangliu, Chongqing, Tokyo Narita, Yantai Penglai International, and Yuzhno-Sakhalinsk.
After agreeing on the contract's conditions, Korean Air plans to sign a framework agreement with Air Incheon in July. The agreement is subject to review by the European Commission and also on securing final merger approval from the US authorities.
