U.S. HOLDS BRAKE ON AIRLINE MERGER

[Anchor Lead]

The proposed merger between Korean Air and Asiana Airlines has hit obstacles, as U.S. authorities decided to conduct more deliberations over the possibility of monopoly it could cause. Industry observers say the merger could take longer time than scheduled.

[Pkg]

The direct flight between Seoul and New York is one of the most highly in-demand air routes. All of the flights on this popular route are operated by Korean Air and Asiana Airlines. The two South Korean airline companies account for nearly 85 percent of also the direct flights between Seoul and Los Angeles, another popular route. U.S. authorities believe that the merger could lead to one company's de facto monopoly and result in higher ticket prices for passengers and reduced quality of service. The U.S.' deliberation was expected to be completed by mid-November. However, the U.S. Justice Department said it plans to extend the review period.

[Soundbite] (Korean Air Official) : "We will actively cooperate in further review and investigation."

Previously, the U.K. requested the two companies to present remedies for possible negative side effects from their merger, such as limited options for passengers and a monopoly of air cargo services. The review of the merger has been completed in nine countries so far. However, it is likely that Korean Air will inevitably face setbacks in its plan to wrap up the overseas review within this year. In particular, the EU has refused to approve two proposed mergers of airline companies since 2019. With China and Japan, there are political and diplomatic factors standing in the way.

[Soundbite] Prof. Heo Hoe-young(Korea Aerospace Univ.) : "The merger was expected to be approved by all countries by the year end. However, it seems that the decision by the U.S., a leading country in the global airline industry, will inevitably postpone all the process until the first half of next year."

Despite its continuing operating profit, Asiana's business management is growing worse with a debt ratio of 10,000 percent. The company will suffer from the growing debt if the merger and its restructuring are delayed.