Korean Air shareholders back articles of association changes

Korean Air (KE, Seoul Incheon) revealed on January 6 that its shareholders had approved an alteration to the company’s articles of association to help smooth its planned Asiana Airlines (OZ, Seoul Incheon) acquisition, Yonhap News Agency reported. Ahead of the KRW2.5 trillion won (USD2.3 billion) rights issue plan set for mid-March, the amendment raised the upper limit of the flag carrier’s shares to 700 million from the current 250 million, the company explained in a statement. 70% of Korean Air stakeholders at a January 6 extraordinary shareholders’ meeting voted for the change. Out of the rights issue proceeds, Korean Air aims to spend KRW1.8 trillion (USD1.65 billion) on taking over its rival. It embarked on due diligence on Asiana in early December to study Asiana’s cost structure and other details, and it plans to create an integration plan by March 17. It will have to submit documents to antitrust authorities in the primary markets it flies to – the European Union, the United States, China, and Japan – by January 14 for review. But it anticipates no significant hurdles in obtaining these approvals, as larger merger deals have gone ahead in the past. Korean Air has insisted that, together with Asiana, its combined 40% of passenger and cargo slots at Seoul Incheon do not constitute a monopoly. The two airlines have in any case suspended most of their frequencies on international routes since March. Korean Air currently operates 53 routes, 41 of which are international, according to the ch-aviation capacities module. The busiest six international routes, including cargo services, are to Anchorage Ted Stevens (22x weekly), Los Angeles Int’l (22x weekly), Tokyo Narita (13x weekly), Hanoi (12x weekly), Shanghai Pudong (12x weekly), and Hong Kong Int’l (11x weekly). Asiana Airlines currently operates a total of 47 routes, 33 of which are international, the busiest non-domestic routes including cargo services being to Los Angeles (22x weekly), Anchorage (21x weekly), Hanoi (21x weekly), Hong Kong Int’l (11x weekly), Osaka Kansai (11x weekly), and Tokyo Narita (11x weekly).