The National Pension Service of South Korea (NPS) will vote against a large capital increase proposed by management of Korean Air, even though the objection raised by one of the company’s major shareholders is unlikely to change the result of the vote.

Korean Air will seek shareholder approval at a special shareholders meeting today (January 6) for a revision of its articles of incorporation to increase the number of authorized shares from 250 million to 700 million – an important step for the carrier to acquire rival Asiana Airlines.

The NPS committee on responsible investment and governance decided at a meeting yesterday to oppose the plan, citing its poor due diligence and the fact that contract terms would be unfavorable to Korean Air as the main reasons for its opposition.

“There are concerns about damage to shareholder value,” said the pension fund. This view is shared by Kang Sung-bu, who is chief executive of KCGI, an activist fund that is the largest shareholder of Hanjin KAL, Korean Air’s parent company.

“They have a duty to protect existing shareholders, and I still believe the capital increase should have been the last resort after all other options were considered for raising money, such as debt financing,” he said.

“The opposition by the NPS will not likely stop the proposal from being passed,” Kang added, noting that other major shareholders had enough voting power.

Korean Air is 31.13% owned by Hanjin KAL and its specially related parties, while the NPS holds 8.11%. The revision of the company’s articles of incorporations must win the support of at least two-thirds of the voting power of shareholders in attendance and one-third of issued shares.

The company’s employee stock ownership plan is another main shareholder, with a 6.39% stake. Employees at Korean Air are reportedly generally positive about the combination of the two carriers. Korean Air president Woo Ki-hong also met with the company’s labor unions last month to get their support on the deal.

Other shareholders may also be supportive, as they focus on the positive impact for the stock price. Shares of Korean Air have climbed 5.2% since the planned deal was announced on November 16 last year, ending at 28,350 won ($26.06) yesterday.

However, concerns about rushing the process will likely continue to be raised, industry watchers said. These concerns reportedly generated a heated debate between members of the NPS committee before they reached their conclusion.

Kang said he would continue to closely watch how the deal goes through, adding that he was not against the integration of the two airlines.

He recently said on a YouTube show that he was not in any hurry to exit from Hanjin KAL, because, “even if Korean Air’s acquisition of Asiana Airlines is completed, the post-merger integration will take time”. (Reporting by Gyuoung-tae Kim)