Asiana Airlines deliberating on sale of cargo biz for EU approval of Korean Air’s takeover

The board of Asiana Airlines Inc., South Korea’s second-largest air carrier, convened Monday to decide whether to sell its cargo business, as Korean Air Co. seeks to win antitrust approval from European Union regulators for its takeover of the rival.

The EU antitrust regulators have raised concerns that Korean Air’s acquisition of Asiana may restrict competition in the markets for passenger and cargo air transport services between the EU and South Korea.

The board meeting, which has continued for over six hours, is being closely watched by stakeholders, including Asiana’s union and employees, as the outcome could potentially end up making or breaking the acquisition deal that has been pursued for the past three years.

The board’s five members — one internal and four outside — are reportedly debating whether the cargo business sale approval will ultimately serve in the interest of Asiana’s shareholders.

The board originally comprised of six members, but Jin Kwang-ho, head of Asiana’s safety and security division and one of Asiana’s two internal board members, offered to resign, citing personal reasons.

Jin was widely known to have been against the cargo business sale. His sudden departure portended a heated debate within the board ahead of the meeting.

Asiana is expected to announce the decision by the board no later than Tuesday.

Korean Air, the larger of South Korea’s two full-service airlines, also convened its own board meeting Monday to discuss remedial measures to address concerns raised by the European Commission (EC), the EU’s executive body.

Korean Air plans to submit formal remedies by the end of the month. It is widely believed that Korean Air seeks to include the sale of Asiana’s cargo business and divesting of landing slots for four European cities.

In a statement sent to Yonhap News Agency, Korean Air said it is “working closely with the EC and will submit formal remedies by the end of the month as requested by the authority to address the concerns.”

Korean Air has reportedly decided to retain the workers of Asiana Airlines on the condition that Asiana agrees to sell its cargo business for the takeover deal to be approved by EU regulators.

Unionized workers at Asiana Airlines have expressed opposition to such a move to sell off the cargo division, citing concerns of possible layoffs.