The Korea Herald


Air Incheon ascends to No. 2 air cargo carrier with Asiana deal

With stock purchase worth W450b set for completion next month, CEO hints at IPO by 2026

By Kim Hae-yeon

Published : June 18, 2024 - 15:22

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Air Incheon cargo planes are parked at Incheon Airport. (Air Incheon) Air Incheon cargo planes are parked at Incheon Airport. (Air Incheon)

Korea's sole all-cargo airline Air Incheon has been named the preferred bidder for Asiana Airlines' cargo freighter division, paving the way for it to expand its business routes to the Americas and Europe. The purchase price is estimated to range between 450 billion won and 500 billion won ($325-million-$362 million).

Air Incheon is to sign a stock purchase agreement by the end of July after two weeks of due diligence and contract discussions. If the deal closes by the first quarter of next year, Air Incheon will ascend to become the nation's No. 2 air cargo operator from a distant No. 6.

Based on trade volume last year, Asiana controlled 28 percent of the air cargo market, falling behind only Korean Air's 57.6 percent. Last year, Air Incheon posted 70.7 billion won in sales, which compared to Asiana’s 1.6 trillion won in freighter business alone.

As a crucial step for its high-profile 1.8 trillion won merger with Asiana, Korean Air chose Air Incheon as the preferred bidder over two other contenders -- Air Premia and Eastar Jet -- based on several key criteria: transaction certainty, the ability to maintain and enhance long-term competitiveness in the air cargo business and the capability to mobilize funds through a competent consortium.

Currently, Air Incheon operates four B737-800SF small cargo planes on routes only within Asia, including China. If the deal is successful, Air Incheon will acquire 11 more cargo planes from Asiana Airlines, consisting of eight owned and three leased aircraft.

The acquisition of Asiana Airlines' long-distance routes to the Americas and Europe and midsized to large cargo planes is expected to significantly boost Air Incheon's business competitiveness.

"Most of our logistics currently route through Incheon to ultimately reach the Americas or Europe," an Air Incheon official said. "With Asiana Airlines' larger aircraft, we aim to establish Air Incheon as a logistics hub for Asia, which aligns with Incheon Airport's goals to become the central gateway," the official added.

Established in 2012, Air Incheon is noted for being Korea's first and only airline specializing exclusively in cargo transportation. It has maintained a safety record with 12 years of accident-free operations since its inception, successfully leading to enlisting major financial investors.

In 2022, private equity firm Socius, led by CEO Lee Byung-guk, who formerly worked at the Korea Development Bank's mergers and acquisitions office, acquired management rights and now holds an 80 percent stake in Air Incheon.

In an interview with a local daily on Monday, Lee pledged to guarantee the job security of some 800 Asiana Airlines employees even after the purchase, hinting at a plan for an initial public offering by 2026.

"Although specifics have yet been decided, we are positively looking for an IPO, which aligns with our major shareholder's (Socius) goals," said the Air Incheon official. In addition to such goal, Air Incheon envisions expanding into last-mile delivery business in the long term, similar to FedEx or DHL, the official said.

"We are well aware of the immense shipping opportunities driven by the booming e-commerce market, especially from China. The opportunities for freighter business in Incheon are larger than ever. We hope that we will be able to deliver logistics to individuals' doorsteps in the future, through faster and more efficient processes," the official added.