South Korea-based private equity fund VIG Partners has acquired Eastar Jet (ZE, Seoul Gimpo) in a deal reported to be worth KRW35 billion won (USD27.9 million). ch-aviation had recently reported that VIG was considering buying the low-cost carrier, and the private equity fund confirmed the acquisition on January 6, 2023.

The vendor, Seongjeong Co Ltd, purchased Eastar Jet for approximately KRW110 billion (USD87.7 billion) in February 2021 with hopes of restarting the insolvent and scandal-plagued carrier. Eastar Jet had stopped flying in 2020 as its financial condition worsened. But since buying the airline, Seongjeong has made little headway with a relaunch. The airline, which formally exited a corporate restructuring program in March 2022, has three B737-800s but is yet-to-be reissued its air operator's certificate (AOC) with government officials repeatedly questioning Eastar's financial viability. The need to shore up the carrier's finances is reportedly behind Seongjeong's decision to divest.

VIG Partners has confirmed that they will also raise KRW110 billion (USD87.7 million) via a rights issue by the end of January to pay down some of Eastar's debt and acquire additional B737-800s. The private equity fund said they would "accelerate" the AOC re-issuance process. Former Asiana Airlines and Air Busan executive Kim Moon-kwon, who was only appointed to the role in November, will stay on as CEO.

"Although many difficulties are expected this year, I will do my best so that Eastar Jet's leap forward can lead to the development of the domestic aviation industry," he told Seoul media in recent days.

South Korea's fiscal year ends on December 31, with financial statements for that year filed with the Financial Supervisory Service (FSS) and released around May in the following year. According to the most recent FSS filings, as of December 31, 2021, Eastar Jet was in a state of complete capital erosion. At the end of that year, retained earnings were negative KRW485.1 billion (negative USD386.9 million) and total equity was negative KRW40.2 billion (negative USD32 million).

VIG Partners has investments across a wide range of industries but to date has avoided the airline industry. Notably, VIG invested KRW52 billion (USD41.5 million) in June 2022 in the South Korean travel booking platform My Real Trip Co. That investment was via a warrant purchase which gives VIG Partners the right to acquire a certain number of ordinary shares at a fixed price. VIG now reportedly hopes to maximise potential synergies between the booking platform and their new airline asset.