November 16, 20205 yr From Channel News Asia SEOUL: South Korean flag carrier Korean Air said on Monday (Nov 16) it will buy out its smaller, troubled rival Asiana Airlines in a US$1.6 billion deal as it looks to consolidate with the global aviation sector devastated by the COVID-19 pandemic. The deal combining South Korea's two biggest airlines comes as carriers around the world struggle with low demand, haemorrhaging cash and grounding planes to survive. "The main reason behind Korean Air's decision to acquire Asiana Airlines at this time is to stabilise the Korean aviation industry, which is suffering from the COVID-19 pandemic," Korean Air said in a statement. "Once Korean Air completes its acquisition of Asiana Airlines, the airline is expected to be ranked as one of the top 10 airlines in the world." Korean Air said it would pay 1.8 trillion won (US$1.6 billion) for Asiana, using cash from a 2.5 trillion won rights issue early next year. The deal also includes Asiana's affiliates, including low-cost carriers Air Seoul and Air Busan. "Considering that Korean Air's financial status could also be endangered if the COVID-19 situation is prolonged, it is inevitable to restructure the domestic aviation market to enhance its competitiveness," Korean Air added.
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