An Air Busan passenger jet / Korea Times file

Korean Air is expected to reject calls to separate Air Busan ahead of its planned integration with Jin Air, despite strong opposition from the nation's southern port city, as the regional airline is on track to stabilize its earnings, according to industry officials on Friday.

The national flag carrier is in the process of merging three low-cost carriers (LCCs) — Jin Air, Air Seoul and Air Busan — after completing its long-awaited acquisition of Asiana Airlines in December.

However, the plan faces strong opposition from the city of Busan and regional companies holding a stake in Air Busan.

According to a regulatory filing, Asiana is the largest shareholder of Air Busan, with a 41.89 percent stake in the regional LCC as of the end of 2024. The city government and local firms there also hold a 16 percent stake combined in Air Busan.

This is not the case for Jin Air and Air Seoul, both of which are fully controlled by Korean Air and Asiana Airlines, holding a 100 percent stake in each LCC, respectively.

The Busan city government and local companies are urging Korean Air to either consider selling Air Busan or relocate the headquarters of the merged LCC to the nation's second-largest city.

However, Korean Air is unlikely to accept such a demand, as it would not contribute to boosting revenues, especially as Air Busan is on track to stabilize its earnings, according to industry officials.

"Air Busan achieved a major turnaround in 2023 and is on course to enhance its profitability throughout 2024, so Korean Air has little incentive to hive off Air Busan simply due to opposition from the region," an official from the aviation industry said.

Air Busan reported sales of 757.8 billion won ($518.18 million) in the first three quarters combined in 2024, up 18.07 percent from a year earlier. Its net profit also jumped by 30.97 percent to 60.9 billion won during the same period.

In 2022, Hanjin Group and Korean Air Chairman Cho Won-tae said that the converged LCC will be operated under the brand of Jin Air, and the western city of Incheon will be the base for the rebranded LCC.

But the city government of Busan reiterated its willingness to keep protesting the move.

In an interview early this year, Busan Mayor Park Heong-joon displayed a willingness to push Korean Air to relocate the headquarters of the converged LCC to the southern city.

However, Korean Air is moving to speed up Air Busan's acquisition of Jin Air. Under the drive, Air Busan plans to hold a temporary shareholders' meeting on Thursday for a top management reshuffle. A group of executives from Korean Air will be appointed as new board members for Air Busan, according to Air Busan's regulatory filing submitted to the Financial Supervisory Service.