The competition to buy the cargo business of Asiana Airlines (OZ, Seoul Incheon) has become a three-horse race with Jeju Air (7C, Jeju) not participating in the second round of bidding this past week. Sale adviser UBS had set an April 25 deadline for second-round bidding with Eastar Jet, Air Incheon, and Air Premia now taking part. All three are either owned or backed by private equity interests.

Asiana agreed to sell its profitable cargo business, which includes eleven freighters, slots, air rights, and employees, in a last-ditch effort to get its planned merger with Korean Air (KE, Seoul Incheon) over the line. European Commission approval was contingent on the divesture going ahead and the two airlines are yet to get approval from US authorities.

Jeju Air confirmed it did not participate in the second round of bidding in a Korean Stock Exchange filing late on April 25. This was despite the LCC participating in first-round bids and a due diligence process earlier this year. A fifth South Korean carrier, Aero K (RF, Cheongju), was also eyeing the cargo business and held talks on the matter, but ended those talks earlier this month. Jeju Air did not give a reason for not continuing its bidding drive.

Asiana, Korean Air, and UBS will reportedly select the preferred bidder in May. The buyer will likely pay between KRW300 billion and KRW500 billion won (USD218-363 million) for the cargo business, plus take on a substantial amount of debt. The European Commission will also need to approve the buyer. While Korean Air and Asiana intend to complete the sale process by the end of the year, it will ultimately remain contingent on securing merger approval from the US authorities.