ⓒYONHAP News

Korean Air will buy rival Asiana Airlines to become one of the world's biggest air carriers. The government held a ministerial meeting on Monday to give the green light for the flag carrier's bid despite antitrust concerns.

Korean Air Lines will buy rival Asiana Airlines in a deal valued at one-point-eight trillion won, creating the world's tenth-largest carrier in terms of aircraft under operation.

Cho Won-tae, chairman of Hanjin Group which owns Korean Air, said the deal will prevent a further injection of taxpayer's money to keep Asiana operating.

[Hanjin Group Chairman Cho Won-tae (Korean-English translation)]

"Due to the COVID-19 outbreak, Korean Air Lines is suffering just as other carriers. But we made this decision in order to ensure the continued growth of our country's airline industry and minimize the injection of public funds, thereby easing the burden on the public. We put a lot of thought into the acquisition, but concluded that it is our duty to follow our founding  philosophy of 'contributing to the country by transportation.' Korean Air has grown over the past half century due to the public's support. We promise to repay that support by taking another leap toward growth."

Korean Air Lines said in a regulatory filing that it will buy one-point-five trillion won, or one-point-35 billion dollars, in new shares of Asiana and also purchase 300 billion won in bonds issued by the cash-strapped airline. Korean Air Lines will finance the deal through a rights offering early next year.

State-run Korea Development Bank(KDB), Asiana's main creditor, will offer ammunition to Korean Air by injecting 800 billion won into its parent company, Hanjin KAL. The parent company will then take part in the rights offering by Korean Air Lines in 2021.

Korean Air, currently the world's 18th-largest carrier, will become Asiana's biggest shareholder with a 63-point-nine percent stake after the acquisition is completed.

The South Korean government stressed that Korean Air's takeover of Asiana was inevitable to help the country's airline industry overcome the crisis triggered by the COVID-19 pandemic.

South Korea's antitrust watchdog will review the deal over the issue of monopoly. If everything progresses smoothly, the deal is expected to be completed next year.

The Ministry of Land, Infrastructure and Transport said the acquisition will proceed under the principle of retaining workers at both carriers.