The flag carrier of South Korea, Korean Air, received the Seoul court’s approval for further actions in a stock issuance to complete the planned purchase of indebted Asiana Airlines.

On December 1, 2020, the Seoul central district court rejected a request filed by Korea Corporate Governance Improvement (KCGI), the local fund, asking the court to issue an injunction prohibiting the sale of Korean Air parent company’s Hanjin KAL stock to Korea Development Bank (KDB). If the court had fulfilled the request, that would have stopped the flag carrier from the takeover of Asiana Airlines.

KCGI, which owns almost 20% of Hanjin KAL shares, argued that if KDB issued new shares in Hanjin KAL stock through a third-party allocation, it would reduce the power of shares held by existing shareholders. However, the court ruled that the issue of shares would not exceed the limits of the country‘s law nor the internal company‘s rules.

“If Korean Air Lines acquires Asiana Airlines, it could secure an exclusive position in the market as the only national carrier. That could help [airlines] overcome financial challenges and secure global competitiveness, and therefore, [the court] accepts KDB’s proposal,” the Seoul central district court announced in a document.

Back on November 16, 2020, Korean Air announced its expectations to spend $1.62 billion to become the top shareholder of the rival Asiana Airlines. The air carrier bid to purchase 1.5 trillion won ($1.35 billion) worth of Asiana shares and 300 billion won ($270 million) worth of Asiana’s convertible bonds with a helping hand of KDB, that would lead the deal and would also invest 800 billion won ($722 million) in Korean Air’s parent company, Hanjin KAL.

Korean Air expected the transaction and process to be finalized by the second half of 2021, making Korean Air the biggest shareholder of Asiana Airlines with a 63.9 % stake.