Travel demand is rising after COVID-19, but what is the situation of domestic low-cost airlines post-COVID-19? Fly Gangwon Airlines faced canceled flights due to management difficulties and compensation issues. Subsequently, delays in aircraft introduction became a problem. This is because many component producers and suppliers have left their companies since COVID-19, leading to a shortage of aircraft manufacturing labor.
Korean Airlines plans to acquire Asiana Airlines. It has received approval from 11 of the 14 countries requiring merger review. However, approval from the Europe Union (EU) and the U.S. has been delayed due to antitrust concerns.
How do companies undertake Mergers and Acquisitions (M&A)? The Yeungnam Observer asked the professor Park Tae-kyung. He said “M&A is analogous to purchasing items: A seller and a buyer need to have an agreed-upon price for a deal to occur. When a company is put up for sale on the market, it is necessary to determine the attractiveness of the business. Then, the interested company makes an offer. At this stage, the price is negotiated by both parties.” If the interests of both parties are aligned, the acquisition or merger takes place. However, since airlines do not operate only in Korea but also fly in and out of foreign countries, foreign airlines may be harmed by the restriction of competition caused by the merger. Thus, it differs from the existing industry in that the merger consent procedure of major countries is required. Also, the airline industry in Korea is an oligopoly, making it subject to rigorous M&A review under the government’s fair trade law.
In the case of M&As in other countries, Air France, the national carrier of France, acquired KLM, which faced management difficulties and is now the world’s third-largest airline, known as Air France-KLM. Similarly, in the U.S., there have been M&As between large airlines such as American Airlines and US Airways, Delta Air Lines and Northwest Airlines, and United Airlines and Continental Airlines.
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