Korean airline merger faces debt burden and antitrust concerns

When South Korea's state-owned development bank in mid-November unveiled its plan to create a "top 10 global airline" by backing a restructuring of the country's two main carriers, it seemed like an appeal to national pride -- but not everyone was buying it. Inside Asiana Airlines, employees were shocked at the news that the larger Korean Air Lines, their bitter rival, was to be their new owner as part of Seoul's plan to help the domestic aviation sector weather the pandemic. The hint of disenchantment and a clash of cultures to come is just one of the potential obstacles to getting the most out of the merger plan -- one of the most radical efforts so far unveiled to reshape Asian aviation as carriers across the region face mounting losses from months of disrupted travel. KAL said it will buy new shares in Asiana worth 1.5t won ($1.4b) as well as Asiana corporate bonds worth 300b won, taking the helm of an enlarged company. The KDB will inject 800b won into Korean Air's parent, Hanjin KAL, in exchange for a 10.66% stake in the holding company as well as three board directors. KDB acted after a $2.2b acquisition deal between Asiana's parent, Kumho Industrial, and Hyundai Development Co. collapsed in September. KDB is a main creditor of Kumho. KAL is strong in long-haul passenger services, connecting Seoul's main airport, Incheon, to key destinations in the US and Europe. Asiana has wide networks in China. Both compete in the domestic market as well as on travel to Japan and Southeast Asia. But both are struggling financially because of the pandemic. Story has much more detail. <br/>