South Korean budget airlines submit bids for Asiana cargo unit, source says (updated)

ASIANA AIRLINES

28/02/2024 08:13

(Changes attribution in paragraphs 1-2; adds background in
paragraphs 6-12)
    By Lisa Barrington and Joyce Lee
       SEOUL, Feb 28 (Reuters) - The sale of Asiana Airlines'
 020560.KS  cargo business has attracted offers from four South
Korean low-cost carriers, a source with knowledge of the matter
said on Wednesday. 
    Jeju Air  089590.KS , Eastar Jet, Air Premia and Air Incheon
all submitted non-binding bids, the source said.
    Korean Air  003490.KS , South Korea's biggest carrier is set
to purchase nearly two-thirds of Asiana for about $1.4 billion,
but EU antitrust authorities have stipulated that Asiana's cargo
business must be sold before they will give the deal their final
approval.
    Korean Air, Asiana, Air Premia and Eastar Jet declined
comment.
    Representatives for Jeju Air and Air Incheon could not be
immediately reached for comment. 
    An acquisition of the cargo unit would encompass Asiana's
freighter aircraft, airport slots, employees and contracts.  
        Thorny issues likely to arise in any deal negotiations
include how much of Asiana's debt the buyer would take on, how
the pricing will reflect post-pandemic drops in freight rates,
and the age of Asiana's fleet, two other sources with knowledge
of the matter said.
    All sources were not authorised to speak to media about the
deal and declined to be identified.
        Analysts have said it is hard to estimate a value for
the unit given the debt issue. Asiana had debt of about 12.7
trillion won ($9.5 billion) as of end-September, according to a
company filing. 
        Asiana accounts for about a fifth of South Korea's
market for overseas air cargo. With 11 cargo planes, it runs 21
routes to 25 cities in 12 countries, including the United
States, Germany and Russia.
    The airline sector has seen a wave of consolidation in
recent months, with Lufthansa  LHAG.DE  seeking a 41% stake in
Italy's ITA Airways and British Airways and Iberia owner IAG's
 ICAG.L  bid for the remaining 80% of Spanish carrier Air Europa
it does not already own.
    Korean Air has obtained a green light from competition
authorities for the Asiana deal in 13 of 14 jurisdictions. It is
still awaiting a U.S. decision. 

($1 = 1,336.1100 won)

 (Reporting by Joyce Lee and Lisa Barrington; Editing by Edwina
Gibbs)
 ((joyce.lee@tr.com;))