Jin Air(272450), AIR BUSAN(298690), AIR SEOUL and the other three Hanjin Group low-cost carriers (LCCs) each held board meetings and said on the 21st they approved a three-way merger and signed a merger agreement. Once follow-up procedures are completed, the carrier will launch as the integrated Jin Air on Mar. 17 next year.
The merger agreement was made to strengthen the three companies' route portfolios, fleets, human and physical networks, and service quality. They also plan to boost competitiveness at key hubs, cultivate new demand, and broaden choices for routes and customer schedules.
The three Hanjin Group LCCs plan to convene separate extraordinary shareholders' meetings in December to approve the merger plan under the merger agreement signed that day, and then proceed with all procedures, including merger approval under the Aviation Business Act and permits from relevant authorities, to complete the merger within the scheduled date.
Jin Air will succeed to AIR BUSAN and AIR SEOUL's asset and liability, rights and obligations, employment, and legal status under this merger agreement.
The merger ratio was calculated, in accordance with laws and valuation standards, as Jin Air 1, AIR BUSAN 0.2862684 and AIR SEOUL 0.7501939. For the listed companies Jin Air and AIR BUSAN, the merger consideration was based on the standard market price under the Financial Investment Services and Capital Markets Act; for the unlisted AIR SEOUL, it was calculated using an intrinsic value method reflecting asset value and revenue value.
Jin Air plans to push in earnest to secure the integrated air operator certificate (AOC) and build a safety system, the core tasks for launching the integrated airline. As it will launch as the integrated Jin Air, the fleets, flight operations, and maintenance infrastructure of AIR BUSAN and AIR SEOUL will be unified based on Jin Air.
They aim to pass the Ministry of Land, Infrastructure and Transport's inspection for changes to the safety management system before the merger date. This inspection is required when an airline undergoes significant changes compared with when it first received its AOC, and without approval, it cannot operate aircraft. Starting with the inspection for changes to the safety management system, they also plan to seek approvals and filings with foreign aviation authorities.
Ahead of the launch of the integrated Jin Air, Jin Air laid the groundwork by investing 22 billion won across all areas, including safety, operations, maintenance, service, and organizational culture, and it expects to complete the integration without setbacks, having also prepared for the integration of customer service and organizational culture.
Jin Air said, "This three-way merger is an important turning point that brings together each airline's accumulated expertise to build a new growth foundation for Korea's LCC industry," adding, "We will complete a successful integration with safety as the top priority and grow into a leading LCC in Asia through optimized route operations and expanded consumer choice."