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Korean Air’s plan for integrated airline with Asiana to cost W600b

Airline to bleed billions to see through major acquisition deal over the next two years

July 11, 2021 - 14:57 By Yim Hyun-su
Korean Air and Asiana Airlines planes lined up at a local airport. (Yonhap)
Korean Air’s plan to launch an integrated airline after acquiring its long-term rival Asiana Airlines will cost an additional 600 billion won ($524 million), new data revealed on Sunday.

According to data obtained by lawmaker Park Sang-hyuk, the airline will have to foot a total bill of around 2.4 trillion won for the acquisition and the post-merger integration process, which will take place over a period of two years.

The plan will see Korean Air integrate its booking and ticketing systems with Asiana’s, as well as their customer database. The IT integration is where most of its post-merger integration budget is expected to be spent.

Flight attendants from both airlines will also work under the same system through new training.

With both airlines having a different mileage system, Korean Air is expected to run promotions in an effort to use up Asiana mileage, rather than creating an integrated mileage system.

Korean Air has so far spent 1 trillion won as part of its acquisition deal valued at 1.8 trillion won, with the remaining 800 billion won still set to be paid.

Earlier this year, the airline raised 3.3 trillion won by issuing new shares to help pay for its acquisition deal with Asiana Airlines.

Korean Air CEO Woo Ki-hong has previously said the integration of the two airlines will create a synergy worth between 300 and 400 billion won each year once the aviation industry fully recovers from the coronavirus pandemic.

The CEO has also promised there would be no forced restructuring as a result of the process.

Korean Air is currently seeking approval from overseas antitrust watchdogs. It has been given the go ahead in Turkey and Thailand so far.