Korean Air Lines disclosed on the 13th that it will merge Asiana Airlines through absorption. The merger date is Dec. 17 of this year, and the merger ratio was set at 1 to 0.2736432.
On this day, Korean Air Lines and Asiana Airlines each held regular board meetings and approved the signing of a merger agreement between the two companies. The signing ceremony will take place on the 14th.
The signing of the merger agreement between the two companies comes 5 years and 6 months after Korean Air Lines signed a contract to acquire new shares of Asiana Airlines in Nov. 2020, and a year and a half after Nov. 2024, when approvals by competition authorities and others were completed.
Korean Air Lines said that during the acquisition and merger process, it fully repaid the 3.6 trillion won in public funds Asiana Airlines received by improving Asiana Airlines' financial structure and normalizing its management.
Under the merger agreement, Korean Air Lines will assume Asiana Airlines' asset, liability, rights, obligations, and employees. Based on the launch of the integrated carrier, Korean Air Lines plans to strengthen its global competitiveness.
The merger ratio of Korean Air Lines and Asiana Airlines was calculated based on the reference market price under the Financial Investment Services and Capital Markets Act. Korean Air Lines said it expects the company's capital to increase by about 101.7 billion won after the merger.
The reference market price was calculated by adding the weighted arithmetic average closing price for the most recent week and the closing price on the day before the board meeting to the weighted arithmetic average closing price for the most recent month, and dividing the sum by 3.
After signing the merger agreement, Korean Air Lines plans to proceed in earnest with all procedures, including approval for changes to operating standards needed for the stable integration of the airline safety management system.
The aim is to maintain Korean Air Lines' air operator certificate (AOC), which will remain after the merger, while integrating the aircraft and the overall safety operation systems held by Asiana Airlines into Korean Air Lines' operating framework.
Along with this, Korean Air Lines will apply to the Ministry of Land, Infrastructure and Transport for merger approval. In June, it will also apply for approval of changes to operating standards that will be revised due to the integration.
However, the company said it will provide guidance on the mileage integration plan as soon as it is finalized. In Dec. last year, in response to the Korea Fair Trade Commission (FTC)'s request for resubmission of the mileage integration plan, Korean Air Lines has been continuing consultations with the relevant authorities.
Asiana Airlines plans to hold an extraordinary shareholders meeting in Aug. to resolve the merger. As this merger meets the requirements for a small-scale merger, Korean Air Lines will substitute a board resolution for a shareholders meeting.
Korean Air Lines said that in the course of this merger, to protect shareholder rights and interests and comply with the duty of loyalty to shareholders under the amended Commercial Act, it also implemented fairness enhancement measures recommended in the Ministry of Justice's "guidelines on directors' codes of conduct in corporate restructuring."
Specifically, its ESG committee performed the role of a special committee, separately reviewing the conditions and fairness of this merger transaction, and it examined the appropriateness of the merger ratio and the fairness of the calculation method through independent outside experts.
After integration, Korean Air Lines plans to continue investing in safety operations and service enhancements to establish a foundation to compete with the world's mega carriers.
Regarding service quality improvements, it has carried out measures such as reallocating overlapping routes, developing new routes to expand customer choices, renovating airport lounges, revamping in-flight meals, and transferring airport terminals.
Regarding safe operations, work is underway on remodeling the operations control center (OCC), the cabin crew training center, and the aviation medical center; standardizing pilot training programs; and expanding aircraft maintenance such as engine test cells (ETC), engine maintenance shops, and hangars.
A Korean Air Lines official said, "We expect synergies such as preserving the competitiveness of the national aviation industry, strengthening Incheon International Airport's hub function, and expanding the global air network through the launch of the integrated airline," adding, "Through this, we will be able to achieve our original goal of elevating Korea's aviation industry by one level."