Activist fund KCGI, which is the largest shareholder of Korean Air's parent company Hanjin Kal, said it had filed for a court injunction to prevent it issuing new shares to state-run Korea Development Bank (KDB).
Korean Air announced plans on Monday to spend 1.8 trillion won ($1.62 billion) to become the top shareholder of Asiana, in aviation's first major takeover since restrictions to curb the COVID-19 pandemic decimated air travel.
"This is the only way for our national airline, our international aviation business to survive," KDB chairman Lee Dong-gull told reporters on Thursday.
Labour groups also opposed the planned deal, citing concerns it will lead to loss of jobs at both airlines.
The takeover plan involves KDB investing 800 billion won and taking newly-issued shares to gain a stake of around 11.9% in Hanjin Kal, which will dilute existing shareholders including KCGI, which in March lost a proxy battle with Korean Air chief executive Walter Cho over Hanjin Kal board seats.
"We will not take any sides ... and be a neutral casting vote," said Lee, adding that the deal's importance in saving South Korean airline industry and jobs was comparable to the problems in the shipping industry which led to Hanjin Shipping's bankruptcy in 2016-2017.
KCGI said in a statement on Wednesday that Hanjin Kal's board of directors had "rushed to issue new shares without any process of collecting shareholders' opinions or even due diligence on Asiana Airlines' financial condition".
KDB vice president Choi Dae-hyun said that if the court grants the injunction to KCGI, the deal will have to be stopped.
(Reporting by Heekyong Yang and Joyce Lee; Editing by Alexander Smith)