1. Air Cargo General
1) Sale of Asiana Cargo Business - Bidder for 2 trillion won valuation
- The new owner of Asiana Airlines' cargo business, recently put up for sale, is attracting attention. Initially, domestic low-cost carriers (LCCs), led by Jeju Air, emerged as strong acquisition candidates, but a different trend from expectations has been observed.
- Following the board's decision to sell earlier this month, LCCs, especially Jeju Air, expressed significant interest in Asiana's cargo business. Other potential acquirers include the first hybrid airline in Korea, Air Premia, and cargo-specialized airline Air Incheon.
- The primary reason for their interest is having the 'air transport business license.' Acquiring a cargo business without the necessary license is practically impossible.
- However, if Jeju Air backs out of the acquisition due to liquidity issues, other LCCs' actions are expected to be less active. The major hurdle is the high valuation, estimated to be between 500 billion and 700 billion won, with expected debt of 1 trillion won.
- Despite achieving record-breaking results in the first three quarters of this year, including revenue of 1.2289 trillion won, operating profit of 138.3 billion won, and net profit of 95.2 billion won, Jeju Air would need to pour more than annual revenue to acquire Asiana's cargo business. Additionally, the average age of Asiana's cargo transport aircraft is over 27 years, posing potential challenges in maintenance and additional costs post-acquisition.
- While the consensus in the industry is that acquisition by LCCs is practically difficult, globally competitive logistics companies with strengthened capabilities in sea, land, and air logistics are being closely watched as potential acquirers. This includes Denmark's Maersk, the world's second-largest shipping and logistics company, and Taiwan's Evergreen, ranked sixth globally.
- Furthermore, with the trend of shipping companies enhancing their competitiveness by entering the airline industry globally and addressing monopoly concerns raised by competition authorities in various countries, there is some persuasive potential.
- Industry insiders suggest that while the possibility of logistics companies actively pursuing the acquisition of Asiana's cargo business is low, it is not an entirely impossible scenario. Given that Asiana's cargo business has a robust global network, several companies may be discreetly exploring acquisition opportunities.
2) Jin Air 3Q Operating Profit of 326 Billion Won: 4 Consecutive Quarters in the Black
3) Global Companies Attempt to Escape China, but Finding Alternatives to China's Supply Chain Continues to Be Challenging
4) Global logistics recession persists, with a slight recovery expected in the second half of next year.
5) Airline/GSA Event Update
(1) AirJapan (NQ) - Plans to Operate Narita-Incheon Route from February Next Year
AirJapan, a subsidiary of the Japan Airlines Group (ANA, NH), is positioned as the third brand airline following Low-Cost Carriers (LCC). It aims to provide services focusing on mid-distance routes with the quality of Full-Service Carriers (FSC) and the convenience of LCC. The airline is planning to operate five flights per week on the Narita-Incheon route from February 22, 2024, and will commence its first international route with six flights per week on the Narita-Bangkok route from February 9 next year.
(2) - Applies for Operating New York-Haneda Route
After Delta Air Lines (DL) returned slots for daytime departures at Haneda Airport, American Airlines (AA) has applied for permission to operate daily flights using the B777-200 on the New York-Haneda route.
(3) - Targets the Asian Market with Flexport
Canadian carrier WestJet Airlines (WS), in its cargo division, plans to expand its services in partnership with Flexport, a digital freight forwarder in the United States. As part of this expansion, WestJet Cargo will operate cargo planes from Chicago to major Asian hubs, including Incheon, Shanghai, and Hong Kong, contributing to cargo delivery in Canada.