Korean Air will acquire and merge with its primary South Korean competitor, Asiana Airlines.
The board of Korean Air parent Hanjin Group agreed to the purchase Monday, which will cost about $1.62 billion, or 1.8 trillion South Korean won. Once the merger is complete, Korean expects to be among the 10 largest airlines in the world, the Hanjin Group said.
Hanjin said it was making the purchase in order to stabilize the Korean aviation industry, which, like elsewhere in the world, is suffering from the Covid-19 pandemic. In general, the company said, countries with similar populations to South Korea have just one full-service airline. Hanjin cited France, Germany and Singapore as examples.
The merger of Korean and Asiana, Hanjin said, will lead to more streamlined route operations and lower costs for Korean Air.
Asiana has been for sale since 2018. A deal signed late last year in which South Korea's Hyundai Development Company would have taken control of the carrier for $2.2 billion fell through amid the pandemic.
Asiana served 74 cities in 22 countries prior to the pandemic, according to its website. In the U.S., it flew to Los Angeles, San Francisco, New York Kennedy, Honolulu and Seattle.