BRUSSELS, Oct 17 (Reuters) – South Korea’s largest carrier, Korean Air Lines (003490.KS), is set to address EU antitrust concerns by offering to sell Asiana Airlines’ (020560.KS) air cargo business and divest routes to four EU cities as part of its acquisition strategy, according to two individuals familiar with the matter.
In the context of ongoing consolidation in the airline sector, highlighted by Lufthansa (LHAG.DE) acquiring a 41% stake in Italy’s ITA Airways and IAG (ICAG.L) purchasing the remaining 80% of Spain’s Air Europa, regulatory authorities are demanding robust remedies beyond simple slot divestments.
Korean Air is actively negotiating with potential buyers, with expectations to finalize a deal with a Korean air cargo competitor to acquire the specified assets, as stated by one of the sources on Tuesday.
The carrier aims to submit the comprehensive proposal, including the remedy taker, to the European Commission by the end of October, although timing adjustments are possible, according to the same source. A Korean Air spokesperson commented, “Korean Air is engaged in full dialogue with the EC, and will submit formal remedies by the end of the month as requested by the authority to address the concerns,” adding, “We are unable to render details at this point in time.”
The EU antitrust enforcer has expressed concerns that the deal may impede competition in passenger and air cargo transport between Europe and South Korea. The investigation, initiated on June 23, was temporarily halted as the commission awaited requested information. In contrast, the UK competition agency decided in March not to initiate a full-scale investigation into the deal.
