With the launch of the integrated Korean Air now 100 days away, the carrier is accelerating physical integration efforts, including redistributing flight times on routes that overlap with Asiana Airlines and preparing new route launches. In contrast, the mileage conversion plan—a core issue in the integration—remains unresolved as Korea Fair Trade Commission (KFTC) approval has been delayed for more than seven months, making customer confusion unavoidable.

According to the aviation industry on September 7, Korean Air and Asiana Airlines will officially launch as “Integrated Korean Air” on December 17. Both companies approved the merger at their respective board meetings and extraordinary shareholder meetings on August 12, and are currently proceeding with follow-up procedures including creditor protection processes and regulatory approvals required for integrated operations.

Route and Schedule Restructuring to Enhance Connectivity

Korean Air is reviewing plans to redistribute flights that both carriers currently operate to the same destinations at similar departure times, splitting them between morning and afternoon slots. The strategy is to adjust the overlapping time slots that the two airlines had competitively scheduled to capture passengers, thereby expanding schedule options for travelers.

Plans are also on the table to redeploy aircraft on routes currently served two to three times per week to enable daily operations. The surplus aircraft freed up through this process will be allocated to new destinations or high-demand routes. A Korean Air official said, “With a wider range of route and schedule options, customers will be able to plan their travel more flexibly and conveniently.”

This route restructuring is considered a key merger synergy. Once the two carriers combine into a single entity, they will be reorganized into a major airline with annual revenue exceeding 20 trillion won (approximately $14.9 billion) and a consolidated fleet of approximately 290 aircraft. Analysts note that the merger will enable integration of redundant infrastructure including maintenance, ground handling, and sales networks, enhance aircraft purchasing leverage, and improve route connectivity and transfer efficiency by dispersing flight times on overlapping routes.

Mileage Integration Stalled for Seven Months

However, the mileage integration plan—the issue customers are most sensitive about—remains unresolved. Korean Air received a request from the KFTC last December to supplement its proposal regarding bonus ticket and seat upgrade supply, and submitted a revised plan on January 22 of this year, but final approval has not been granted for more than seven months.

Under the integration plan disclosed by Korean Air, Asiana miles earned through flight travel will be converted to SKYPASS miles at a 1:1 ratio. Miles earned through partners such as credit cards and hotels will be converted at a ratio of 1:0.82. This means 10,000 partner miles would convert to 8,200 SKYPASS miles.

Existing Asiana miles will be operated separately for 10 years after the merger, during which customers may choose whether to convert. Even without conversion, customers will be able to use their miles for bonus tickets and seat upgrades on all Korean Air routes under the existing redemption standards. Individual mileage validity periods will be maintained, and miles newly earned after the integration will be unified under SKYPASS.

The KFTC is reportedly examining whether the mileage conversion ratio and actual usage opportunities are sufficiently guaranteed. This is because even if routes and flight frequencies increase, mileage users’ benefits could be limited if bonus seat availability is insufficient.

If approval is not granted by the merger date, the two companies’ mileage programs will likely be operated separately. Korean Air has also stated in its securities registration statement the possibility of maintaining and operating the existing programs separately until approval is granted. In this case, customers who wish to combine miles accumulated across both carriers to purchase tickets would have to wait until conversion becomes available. The company would also inevitably bear the cost of operating separate IT systems and staffing.

An aviation industry source noted, “The longer the integration plan remains undecided, the harder it will be for customers to plan their mileage conversion and usage. While consumer protection measures should be thoroughly reviewed, the conversion standards and implementation schedule should be finalized before the merger so that customers can understand and use the new system.”

Financial Burden Materializes Before Merger

Korean Air’s financial burden is also growing rapidly ahead of the merger. First-half consolidated operating profit fell more than 60% year-over-year, and total borrowings exceeded 24 trillion won (approximately $17.8 billion). Integration costs, subsidiary losses, and large-scale investment burdens are being reflected in financial statements before unrealized merger synergies.

NICE Credit Rating on September 6 assigned Korean Air a credit rating of ‘A’ with a ‘Positive’ rating outlook, reflecting the potential for strengthened market position and improved operational efficiency following the Asiana Airlines merger. However, the agency also noted that current performance and financial structure alone do not warrant optimism.

Korean Air’s first-half consolidated revenue was 13.8881 trillion won (approximately $10.3 billion), up 9.3% year-over-year. Operating profit, however, plunged 61.3% from 801.1 billion won (approximately $595.3 million) to 310.3 billion won (approximately $230.6 million). EBITDA also declined 17% from 2.1943 trillion won (approximately $1.6 billion) to 1.8204 trillion won (approximately $1.4 billion). EBITDA margin fell from 17.3% to 13.1%, and operating margin dropped from 6.3% to 2.2%. Net loss for the period was 566.4 billion won (approximately $420.9 million).

The financial burden is clearly evident in the numbers.

MetricEnd of 2023End of 2024End of June 2025Total Borrowings10.9469 trillion won22.4881 trillion won24.6466 trillion wonNet Borrowings4.772 trillion won-19.2097 trillion wonDebt Ratio209.6%-390.7%Debt-to-Assets Ratio36%-46.7%Total Borrowings/EBITDA3.1x-6.8x

Note: End-of-2024 figures for net borrowings, debt ratio, debt-to-assets ratio, and total borrowings/EBITDA were not disclosed.

Notably, the debt-to-assets ratio of 46.7% at the end of June exceeds the 45% threshold that NICE Credit Rating has set as the review criterion for a return to a ‘Stable’ rating outlook. If the debt-to-assets ratio remains above 45% due to aircraft acquisitions and non-recurring cash outflows amid limited merger synergies, the current ‘Positive’ outlook could be adjusted back to ‘Stable.’

Short-term liquidity is also under scrutiny. Cash and cash equivalents at the end of June totaled 5.4369 trillion won (approximately $4.0 billion), while short-term borrowings amounted to 7.2357 trillion won (approximately $5.4 billion). Cash and cash equivalents fell short of short-term borrowings by 1.8 trillion won (approximately $1.3 billion). The ratio of cash and cash equivalents to short-term borrowings declined from 94.8% at the end of last year to 75.1% at the end of June.

Future investment burdens are also substantial. Korean Air plans to introduce an average of approximately 15 new aircraft annually to replace its aging fleet and improve fuel efficiency. Construction of a new engine maintenance facility and acquisition of the remaining stake in Korean Air C&D Service are also scheduled. The remaining payment for the stake acquisition alone amounts to 675 billion won (approximately $501.6 million), due at the end of this month. Consolidated capital expenditures (CAPEX) last year totaled 4.1625 trillion won (approximately $3.1 billion), up 44% from the previous year.

Costs arising from the integration process are another variable. Korean Air and Asiana Airlines are scheduled to merge on December 16, followed by the merger of three low-cost carriers (LCCs)—Jin Air, Air Busan, and Air Seoul—in March next year. Significant costs are expected from aircraft repainting, IT system integration, airline alliance withdrawal, and maintenance and ground handling reorganization. However, NICE Credit Rating projected that “based on accumulated financial capacity and operating cash flow, Korean Air will be able to control the increase in financial burden to a certain level.”

Once the LCC integration is completed, there is potential for further profitability improvement as excessive competition in South Korea’s domestic aviation market eases. The merger date for the three LCCs—Jin Air, Air Busan, and Air Seoul—is March 16 next year.

Ultimately, the success of the integrated Korean Air hinges on two factors. One is how quickly synergies can be realized through route and schedule restructuring and infrastructure integration. The other is how quickly the uncertainty surrounding the mileage integration plan can be resolved. The former is within the company’s control, but the latter depends on the KFTC’s judgment. As the merger date approaches, customer interest and anxiety over the fate of the mileage program continue to grow.