Air Incheon to bid for Asiana Cargo

South Korea-based Air Incheon intends to bid on Asiana Cargo at the end of the month as it looks to expand capacity into the large-widebody freighter segment. The divestment of Asiana Cargo is a condition from the European Commission (EC) for Korean Air’s proposed merger with Asiana. The merger received conditional approval from that agency on Feb. 13. [caption id="attachment_56867297" align="aligncenter" width="1886"] Asiana Cargo has a fleet of eleven freighters. (Courtesy/Emery Air)[/caption] Shedding the cargo unit Under the deal, Asiana must release its freighters, slots, traffic rights, employees and customer cargo contracts, according to a statement from the EC. “Korean Air can only implement the acquisition of Asiana following the commission’s approval of a suitable buyer for the cargo divestment,” the EC said. “Among other requirements, the buyer must be able and have the incentives to operate the divested business in a viable manner and to compete effectively with the merged company.” Sale of the cargo division will hinge on factors such as the inclusion of existing interline agreements with other Star Alliance carriers, new labor contract approval from the 800 employees included in the bid and verification of the bidders’ finances to implement fleet renewal of Asiana Cargo’s freighters, a source familiar with the sale told Cargo Facts . The seller’s adviser, UBS Securities Korea, has distributed bidding details to operators interested in submitting proposals by the Feb. 28 deadline, the source said, adding that the EC will assign a trustee to monitor the process and verify the operational capabilities of each bidder. The winning bidder is expected to be announced at the end of April, the source said. Interested bidders A local report in January suggested that South Korean low-cost carrier Jeju Air, which added its second 737-800BCF at the end of 2023, would be the only bidder. Another South Korean low-cost carrier, Aero K, said this week that it will also submit a bid, according to local reports. Additionally, fellow South Korean operators Eastar Jet, Air Premia and T’way Air submitted letters of intent to acquire Asiana Cargo, according to a local report in November 2023. T’way Air subsequently withdrew its bid but will receive support from Korean Air to launch passenger service from Seoul (ICN) to Paris (CDG), Rome (FCO), Barcelona (BCN) and Frankfurt (FRA), according to the EC. Air Incheon operates four 737-800SFs but plans to add up to five 777-300ER conversions in the next few years. The airline’s major shareholder is Seoul-based private equity firm Socius Advisors. The closing date for the Asiana Cargo acquisition has been set for the end of June; Korean Air hopes to obtain EC and United States Department of Justice approval to finalize the merger by yearend, according to the source. Asiana Cargo’s freighter fleet consists of eleven General Electric CF6-powered aircraft: Four 1994- to 2004-vintage production 747-400Fs; Six 1991- to 1999-vintage 747-400BDSFs; and One 1996-vintage production 767-300F. The fleet has a market value of about $180 million, according to an evaluation by appraisal and consultancy firm mba Aviation. Cargo Facts Asia 2024, the essential event for stakeholders in the Asia-Pacific region, will take place April 15-17 in Singapore. Learn more and register by March 1 to take advantage of early-bird pricing.

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