Hyundai Heavy Industries’ big deal Musan Fargo, will it reach Korean Air?

Hyundai Heavy-Daewoo Shipbuilding merger canceled due to EU opposition
Korean Air and Asiana are also undergoing EU review
Attention is focused on whether the aviation big deal will cross the EU wall

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▲ Korean Air and Asiana Airlines aircraft are standing at the apron at Incheon International Airport.
yunhap news

As the M&A of Daewoo Shipbuilding & Marine Engineering (M&A) of Daewoo Shipbuilding & Marine Engineering (M&A) of Daewoo Shipbuilding & Marine Engineering, the No. 1 shipbuilder in Korea, was canceled due to the refusal of approval by the European Union (EU), attention is focused on whether the merger between Korean Air and Asiana Airlines, the No. . The key is whether Korean Air can overcome the wall of EU competition authorities that Hyundai Heavy Industries has failed to overcome.

According to the aviation industry and the Fair Trade Commission on the 16th, Korean Air is currently undergoing a business combination review by competition authorities in seven countries, including the Fair Trade Commission, mandatory reporting countries such as the EU, the US, China, and Japan, and voluntary reporting countries including the UK, Singapore and Australia. . The Fair Trade Commission made a provisional decision to approve the business combination on condition that the reallocation of transportation rights and the return of slots (the number of takeoffs and landings per hour) were fulfilled. Korean Air plans to submit a written opinion on the Fair Trade Commission review report by the 21st.

The problem is the approval of foreign countries. The EU, which canceled Hyundai Heavy Industries’ big deal, is the biggest ambush in Korean Air’s big deal. The EU did not approve the recent merger of Air Canada, the No. 1 Canadian airline, and Air Transat, the No. There was only one ‘monopoly’. In particular, the EU has kept strict standards without exception, even though Spanish airlines are comparable to their own airlines.

In this situation, when the EU did not allow Hyundai Heavy Industries to take over Daewoo Shipbuilding & Marine Engineering, concerns began to arise that the Korean Air merger might be a red flag. This is because Korean Air is not free from monopoly. When Korean Air decided to acquire Asiana Airlines in November 2020, expectations were high that Korean Air, the world’s 18th largest airline, and Asiana Airlines, the 32nd in the world, would merge to create the world’s 7th largest mega-carrier (large airline). However, as the possibility of the birth of such a mega airline shifted to a monopoly controversy, it has now become a situation in which the merger review is held back.

Some argue that two big deals should not be viewed on the same line because the competitive environment between the global shipbuilding industry and the aviation industry is different. Even if only two companies, Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering, combine, the global liquefied natural gas (LNG) carrier market share exceeds 60%, so there are not many absolute companies in the shipbuilding industry. On the other hand, in the aviation industry, there are hundreds of airlines around the world, including large airlines such as Qatar Airways, Singapore Airlines, Delta Air Lines and Lufthansa. In response, Korean Air also told the EU, “There are only four overlapping routes: Paris, Italy, Rome, Frankfurt, Germany, and Barcelona, ​​Spain. ” is said to have been emphasized.

Reporter Sejong Lee Young-joon