Air Incheon plans to order wide-body cargo planes after Asiana Cargo purchase

By Lisa Barrington

SEOUL (Reuters) – Air Incheon, which is set to become South Korea’s second-largest cargo carrier once a deal to buy Asiana Airlines’ cargo unit is finalized, will consider using both Boeing (NYSE:) and Airbus freighters to renew its wide-body fleet, its chief executive said.

The European competition regulator last month approved Air Incheon, a small cargo-only carrier with four Boeing 737s, as the preferred bidder to buy Asiana’s cargo business as a condition of approving its merger with Korean Air Lines.

The acquisition, the amount of which was not disclosed, would transfer Asiana’s fleet, personnel, customers and traffic rights to Air Incheon, which is headquartered at Incheon Airport, South Korea’s main international gateway and the world’s fifth-busiest cargo airport. Asiana operates 11 Boeing 767s and 747 freighters to 25 cities in 12 countries.

The acquisition will include flight rights to major Chinese export hubs such as Shanghai, Guangzhou and Hong Kong, as well as the United States, Air Incheon CEO Stanley Seunghwan Lee told Reuters in an interview this week.

The goal is to become a global provider of wet leasing and charter services rather than selling space directly to logistics companies, he added.

Lee plans to gradually modernize Asiana’s aging fleet of wide-body jets, a task complicated by a global shortage of aircraft and a delay in U.S. approval of conversions of Boeing’s 777-300ER from passenger to freighter.

“Air Incheon can operate Asiana’s current fleet for at least five to seven years,” he said.

Lee is in talks with lessors and manufacturers of converted Boeing 777-300ERs, Boeing 777 factory freighters or Airbus A350 freighters, which the European planemaker plans to put into service in 2026.

The Asiana Pilots Union (APU) said it was not satisfied with the choice of Air Incheon as the preferred bidder, saying it was too small to compete with Korean Air.

The APU, which also opposes Korean Air’s takeover of Asiana, said more than 100 Asiana cargo pilots had submitted letters on Thursday saying they would resign if they were transferred.

Lee said Air Incheon needed the cooperation and experience of Asiana staff and would guarantee the same salary and similar benefits.

Korean Air has won the green light from 13 of 14 competition authorities for the Asiana deal and CEO Walter Cho said he expects the final U.S. decision by the end of October.