By Kwanwoo Jun
Shares in South Korean carriers Asiana Airlines Inc. and Korean Air Lines Co. rallied Tuesday after a U.K. antitrust watchdog said it is considering accepting a revised plan to address competition concerns about the companies’ planned merger.
Asiana’s shares surged as much as 24% to 14,450 won ($10.77) in morning trade, the sharpest intraday gain in 22 months, and Korean Air rose 4.9% to KRW25,750, its steepest daily rise in more than two weeks, according to FactSet. The stock benchmark Kospi was last up 0.2%.
The rally came after the U.K. Competition and Markets Authority said Monday that it is considering new measures Korean Air has proposed to address competition concerns over its $1.29 billion plan to acquire financially-strapped Asiana. The CMA has until Jan. 26 next year to decide on the review.
The CMA had previously said that the merger could lead to higher ticket prices for London-Seoul flights and unfairly affect air-cargo services, given that the two airlines are the main suppliers of direct passenger and cargo services between the U.K. and South Korea.
The deal has a long way to go before it is finalized. It still needs approval from regulators in the U.S., the EU, China and Japan, Eugene Investment & Securities analyst S.Y. Yang said in a research note Tuesday.
If completed, the merged Korean Air-Asiana entity would have a significant competitive advantage over its global rivals by diversifying flight routes and improving transit services, he noted, initiating coverage of Korean Air with a buy rating and KRW35,000 target price.
Korean Air first announced the plan to take over ailing peer Asiana in November 2020, causing a pandemic-induced shakeup of South Korea’s aviation industry.
Write to Kwanwoo Jun at email@example.com