SOUTH Korea's asiana Airlines says its board has approved the sale of the company's cargo business - an important step towards allaying EU competition concerns about a proposed takeover by Korean Air Lines, according to Reuters,
Korean Air, the country's biggest carrier, said in a statement following the decision that it had submitted a package of remedies to the European Commission - remedies that also include it divesting routes to some European Union cities.
Analysts said, however, that Asiana's greenlighting of the cargo unit sale did not necessarily ensure smooth sailing ahead for the deal.
They noted the desired valuation for the air cargo unit of some KRW700 billion (US$520 million) including debt, as reported by local media, was probably too high. That could become a new stumbling block for the sale and hence regulatory approval.
'The price seems to be way too expensive, and there aren't that many players at home with the means to spend that much money on Asiana's debt-ridden cargo unit, there are lingering uncertainties,' said Bae Se-ho, an analyst at Hi Investment & Securities.
And even if the deal gets the nod from the European Union, it still needs approval from the United States and Japan, analysts also noted.
Korean Air said in a statement that while it was continuing with 'its efforts to secure the approval from the European Commission, the airline will also communicate closely with the remaining regulatory bodies to finalize the approval process as quickly as possible.'
Korean Air also said it will buy KRW300 billion of convertible bonds issued by Asiana, part of fresh financial support to the smaller airline.
Any takeover of Asiana by Korean Air would come amid a wave of consolidation in the industry, with Lufthansa (LHAG.DE) acquiring a 41 per cent stake in Italy's ITA Airways and British Airways and Iberia owner IAG (ICAG L) buying the remaining 80 per cent of Spanish carrier Air Europa it does not already own.
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Korean Air, the country's biggest carrier, said in a statement following the decision that it had submitted a package of remedies to the European Commission - remedies that also include it divesting routes to some European Union cities.
Analysts said, however, that Asiana's greenlighting of the cargo unit sale did not necessarily ensure smooth sailing ahead for the deal.
They noted the desired valuation for the air cargo unit of some KRW700 billion (US$520 million) including debt, as reported by local media, was probably too high. That could become a new stumbling block for the sale and hence regulatory approval.
'The price seems to be way too expensive, and there aren't that many players at home with the means to spend that much money on Asiana's debt-ridden cargo unit, there are lingering uncertainties,' said Bae Se-ho, an analyst at Hi Investment & Securities.
And even if the deal gets the nod from the European Union, it still needs approval from the United States and Japan, analysts also noted.
Korean Air said in a statement that while it was continuing with 'its efforts to secure the approval from the European Commission, the airline will also communicate closely with the remaining regulatory bodies to finalize the approval process as quickly as possible.'
Korean Air also said it will buy KRW300 billion of convertible bonds issued by Asiana, part of fresh financial support to the smaller airline.
Any takeover of Asiana by Korean Air would come amid a wave of consolidation in the industry, with Lufthansa (LHAG.DE) acquiring a 41 per cent stake in Italy's ITA Airways and British Airways and Iberia owner IAG (ICAG L) buying the remaining 80 per cent of Spanish carrier Air Europa it does not already own.
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