"Air Incheon has focused primarily on short-haul routes to Vietnam and China, but competition has been fierce and profitability has not been good. I expect that the long-haul routes held by Asiana Airlines, especially those to North America and Europe, will be more profitable due to higher fares."
Meeting in mid-April at the Air Incheon office in Gangseo District, Seoul, Kim Kwan-sik, the CEO of Air Incheon, noted that they are preparing for the integrated operation of Asiana Airlines' cargo division. On April 16, Air Incheon signed a main contract to acquire Asiana Airlines' cargo division for 470 billion won. They are accelerating post-merger integration (PMI) efforts with the goal of launching New Air Incheon in July.
CEO Kim has over 30 years of experience in manufacturing. He joined Kumho Tire in 1993, serving as chief financial officer (CFO) at its subsidiaries in the United States and China, and in 2018 he worked as CFO at HSD Engine, a manufacturer of ship engines (now Hanwha Engine). He became the CEO of Air Incheon in December 2024 through a recommendation from the private equity fund Socius Private Equity, the largest shareholder of Air Incheon.
Kim's first task is organizational integration. He said, "While I am not an expert in the airline industry, I consider my responsibility to ensure that the two organizations can merge harmoniously, as I come from the Kumho Asiana Group. I am focusing on placing talent in the right positions and facilitating collaboration across institutional sectors."
First, they plan to improve the treatment of Air Incheon employees to the level of Asiana Airlines. By July, 778 employees will be transferred from Asiana Airlines, and job security has been promised for them. The number of employees at Air Incheon will increase from the current 174 to about 1,000. As the workforce expands, the headquarters will move to the Magok Won Grove building in Gangseo District, Seoul, and the company name will also be changed.
Efforts are being made to prepare for integrated operations. There is particularly high expectation for routes to North America, which have higher fare rates. Air Incheon is in the process of obtaining an air operator certificate (AOC) from the Ministry of Land, Infrastructure and Transport to operate a Boeing 747-400F cargo aircraft.
Air Incheon currently operates four Boeing 737-800SF aircraft, and 10 Boeing B747-400F and one 767-300F will be transferred from Asiana Airlines. The aircraft in Air Incheon can carry about 20 tons of cargo each, while those owned by Asiana Airlines can carry 100 tons and 50 tons per unit, respectively. Assuming that the aircraft are fully loaded, this means that transport volume could increase 13 times compared to now.
However, most of the aircraft are aging, so they will need to be replaced gradually starting next year. Cargo aircraft must be retired after 30 years of service. According to the aviation statistics from the Ministry of Land, Infrastructure and Transport, the average age of Asiana Airlines' 11 cargo aircraft is about 27 years, while the average age of Air Incheon's four cargo aircraft is about 24 years.
Once the integration effects are realized next year, the annual revenue of the integrated Air Incheon is expected to surpass 1 trillion won. In 2023, Asiana Airlines' cargo sector revenue was 1.6 trillion won. Considering that the revenue share from cargo aircraft compared to belly cargo in passenger planes is typically 30% to 70%, cargo aircraft revenue is about 1.1 trillion won. Adding Air Incheon's revenue (707 billion won as of 2023) brings the expected revenue to about 1.2 trillion won.
Kim stated, "I will focus on improving profitability and enhancing corporate value." Typically, private equity funds manage for about five years to increase the company's valuation before recouping their investment. The acquisition contract between Air Incheon and Asiana Airlines' cargo division includes Hyundai GLOVIS as a strategic investor (SI), which also holds a preemptive purchase right.
He said, "It may not be a pleasant situation for employees of Asiana Airlines that Air Incheon, which is much smaller and has a shorter history than Asiana Airlines, is acquiring the cargo division. There may be differing opinions, but I want to create a corporate culture that respects and considers each other. I will do my best to ensure that everyone can challenge themselves joyfully and achieve success."