“Why aren’t we giving incentives for corporate combinations?” Chairman Cho Won-tae, who emphasized ‘one family’, will he also take care of LCC?

Executives and employees of Korean Air and Asiana Airlines, who completed the business combination process that lasted about 5 years and 7 months, will receive business combination encouragement money this week. However, as there has been no specific mention of merger incentives for LCCs (low-cost carriers), which are subsidiaries of both companies, attention is focused on whether incentives will also be paid to them in the future.

According to the aviation industry on the 20th, Korean Air will receive a ‘corporate combination incentive’ worth 50% of the bonus upon completion of the merger of Korean Air and Asiana Airlines on the 21st. In the case of Asiana Airlines, the incentive money will be paid on the 24th.

Previously, Korean Air decided to pay a ‘merger approval congratulatory money’ upon the completion of the business combination through a wage and collective agreement (collective wage agreement) in May last year. It has been reported that the incentive money paid to Asiana Airlines executives and employees has recently been confirmed.

In a message sent to Asiana Airlines executives and employees on the 16th, Korean Air Chairman Cho Won-tae said, “I could feel your fatigue due to the corporate combination review,” and encouraged, “We will ensure that you receive fair opportunities and compensation according to your abilities and efforts during the process leading up to the integration and after the integration.”

In particular, Chairman Cho has been actively taking care of Asiana Airlines, calling it ‘one family’. He also became a hot topic as he departed from the United States on Asiana Airlines, not Korean Air. On the 10th, Chairman Cho flew on an Asiana Airlines flight between Incheon and LA. This is interpreted as an attempt to emphasize the image of Asiana Airlines as ‘one family’ both internally and externally.

In fact, in his New Year's address on the 2nd, he emphasized, "Last year, there was a big change in which Korean Air, Asiana Airlines, and group companies came together under the roof of Hanjin Group," and added, "I envision a smooth process of becoming a true family."

However, there are some complaints among executives and employees of Jin Air, a subsidiary of Korean Air, and Air Busan and Air Seoul, subsidiaries of Asiana Airlines. This is because, unlike paying incentives to executives and employees of both companies following the merger of Korean Air and Asiana Airlines, no plans were announced to pay incentives to subsidiary LCCs.

An industry official said, “Various procedures related to the merger are in progress within the subsidiaries, but they are completely excluded from discussions on the merger incentive fund.” He added, “I hope that LCCs will also take care of it in order to boost employee morale.”

A corporate merger incentive is a financial compensation paid after a company merges with another company. Although it is not a legal obligation, it is customarily implemented and is used by many companies to stabilize labor-management relations and smooth organizational integration.

However, some believe that financial compensation for LCCs is also necessary, as the purpose of paying incentives for business combinations is to encourage workers' motivation to work. However, some say that related discussions are premature because the merger of the three LCC companies has not yet been specifically completed.

Choi Young-jin, an attorney at Daeryun Law Firm, explained, “In the case of corporate combination incentives, the compensation is paid after the company merges with another company. In other words, since the integration of the three LCC companies has not yet been completely completed, even if the incentive money is paid, it will be after a complete merger has occurred.”

Reporter Seojin Ahn (seojin@mk.co.kr)

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“Why are we not giving incentives for corporate combinations?”… Chairman Cho Won-tae, who emphasized ‘one family’, will he also take care of LCC (link)