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| An Asiana Airlines flight attendant serves in-flight meals to passengers during a flight in this October file photo. / Joint press corps. |
By Park Jae-hyuk
Following the announcement earlier this month that Korean Air will take over Asiana Airlines, attention is being focused on whether domestic private equity firm (PEF) Hahn & Company will take over the company that provides in-flight meals to Asiana, as it has already decided to acquire the supplier for Korean Air.
In August, Korean Air signed a deal to sell its in-flight catering and duty free businesses to Hahn & Co. for 990 billion won ($845 million) to help overcome the liquidity crisis caused by the COVID-19 pandemic. Back then, the airline said it would retain a 20 percent stake in the new business entity to be set up by the PEF after the acquisition.
Hahn & Co. established the new company named Korean Air C&D (catering and duty free) Service in September; and the two companies are looking to close the deal before mid-December.
If the Korean Air takeover of Asiana is approved, it will be more cost-efficient for the air carriers to have a single in-flight meal supplier.
However, Asiana's contract with its current supplier, Gate Gourmet Korea (GGK) last until 2048.
GGK was established in 2016 as a joint venture between Asiana and Hainan Airlines, the then parent company of Gate Gourmet. After experiencing financial difficulties last year, the Chinese carrier sold its stake in Gate Gourmet to RRJ Capital, a Singaporean PEF.
At this moment, there is little reason for Asiana to continue working with Gate Gourmet because the in-flight meal provider has no relationship with its foreign partner airline anymore. But it still could face a penalty for breaking the contract.
If Asiana continues to work with Gate Gourmet, Hahn & Co. may not enjoy enough benefits from the in-flight catering and duty free businesses.
Some observers therefore expect the PEF may pursue a "bolt-on" acquisition ― the acquisition of a smaller company, usually in the same line of business.
Given that the KDB is also seeing the necessity of streamlining the supply chain of the air carriers, Hahn & Co. can also expect some support from the state-run bank if it decides to acquire GGK, according to sources.
