The final bidding results for Asiana Airlines’ cargo business are expected to be announced as early as the end of this week, approximately a week later than initially planned. Currently, the sellers are in final discussions with the European Commission (EC) to select the preferred bidder.
According to sources in the Korean investment banking industry, UBS, the sale manager for Asiana Airlines’ cargo business, is expected to announce the preferred bidder as early as the first week of June. An industry insider stated, “The final meeting between the sellers and the EC to select the preferred bidder was initially scheduled for the last week of May but was postponed by a week. We anticipate the results could be announced by Wednesday of this week.”
In late April, three domestic low-cost carriers – EastarJet, Air Premia and Air Incheon – participated in the final bidding for Asiana Airlines’ cargo business, each reportedly offering around 500 billion won.
Initially, the sale manager planned to select two preferred bidders by early May and provide them with additional due diligence materials. They aimed to finalize a legally binding contract with one bidder by the end of June and report the sale of Asiana Airlines’ cargo business to the EC by July. This timeline was crucial to meet all conditions required for the merger between Korean Air and Asiana Airlines by November and to obtain merger approvals from both the EC and U.S. authorities.
An industry insider explained, “Although it’s not mandatory to obtain EC approval before selecting the preferred bidder, choosing a preferred bidder domestically and reporting it to the EC only in July would be too risky, hence the need for preliminary coordination.”
Each of the three bidders – EastarJet, Air Premia and Air Incheon – has distinct strengths and weaknesses. EastarJet, the oldest and largest among the three low-cost carriers, was initially considered a strong contender alongside Jeju Air before the current sale structure was determined. Industry experts believe that EastarJet benefits from having a financial investor (FI) invest first, followed by the low-cost carrier acquiring Asiana Airlines’ cargo business. This minimizes potential valuation conflicts, as EastarJet’s major shareholder, VIG Partners, participates as an FI. However, EastarJet’s lack of experience in cargo operations, having only recently received an air operator certificate, is seen as a drawback.
Air Premia has emerged as a prominent candidate, supported by MBK Partners. Sources indicate that MBK Partners, rather than Air Premia’s major shareholder AP Holdings, holds effective control in this acquisition. Air Premia reportedly offered the highest bid among the three, backed by MBK Partners’ financial strength and experience in cargo transport. However, the involvement of foreign institutional investors, such as Canada’s British Columbia Investment Management Corp. and the U.S.’s Public Employees’ Retirement Association of Colorado, could pose an issue. Korean aviation law restricts foreign ownership and control of national airlines. An industry insider noted, “The ultimate determination of the controlling entity within the Air Premia-MBK Partners consortium will be crucial.”
Air Incheon, a cargo specialist airline, has strengths including its experience and the fact that its major shareholder, Socius, has a CEO with a background in KDB’s M&A department, which is familiar with such transactions. However, Air Incheon is the smallest of the three bidders and lacks a blind fund. To address this, Air Incheon has partnered with Korea Investment Partners PE division, and Inhwa Precision, which previously invested in Socius’ project fund, has joined again as a strategic investor.
