Korean Air’s Asiana acquisition: What is happening?

Korean Air’s plan to acquire financially-troubled rival Asiana Airlines is facing a bumpy road as the deadline for the 1.8t won ($1.6b) deal has been pushed to the end of this year. The takeover plan was first announced in November last year, making headlines that the two South Korean full service carriers would merge, giving birth to one of the world’s ten biggest airlines. In recent months, however, slow progress for the deal -- which was initially set to be complete by the end of June -- has been met with frustration and concern from those involved in the process including airline staff and the Korea Development Bank, Asiana’s main creditor. Once seen as Korean Air’s rival, Asiana has short-term liabilities worth over 5t won set to mature within a year. “As the review of the merger has been delayed, there is a sense of unrest and concern among Asiana staff over unstable management. They want the process to wrap up swiftly for financial stabilization,” one industry official, who wished to stay anonymous, said. In a press conference last month, Lee Dong-gull, the chairman of the state-run bank said integration of Korean Air and Asiana Airlines is “inevitable” and “essential” for the Korean airline industry to survive and gain competitiveness in the global market. He also said it was “regretful” that the approval process has been slow. “I hope the (local authority) will approve the deal as soon as possible,” he said. On Tuesday, South Korea’s Fair Trade Commission said in a report to the National Assembly that its review of the acquisition will be complete within this year. <br/>