Eastar Jet (ZE, Seoul Gimpo) has submitted its restructuring plans to Seoul Rehabilitation Court by the required - and repeatedly postponed - deadline as part of its intention to finalise an acquisition deal with property developer and golf course owner Sungjeong.
However, the low-cost carrier now aims to resume commercial flights early next year rather than by the end of 2021. It will prepare steps to regain its Air Operator’s Certificate (AOC) in or by December, Eastar Jet CEO Kim You-sang told Yonhap News Agency.
If Eastar Jet’s debt settlement proposals - which it also submitted to the bankruptcy court - are accepted by two-thirds of its creditors, the court will close the deal. A creditor meeting is set for November.
Presenting the plans comes three months after Sungjeong signed a deal to buy an 80% stake in the airline for KRW108.7 billion won (USD92 million) and paid a KRW11 billion (USD9.3 million) deposit.
“Once the company receives government approval for flights, it will focus on putting its business back on track as soon as possible,” the chief executive told the news agency.
Eastar is initially required to pay more than KRW70 billion (USD59 million) in unpaid wages and retirement benefits to current and former employees. It must then negotiate substantial debt write-downs with the rest of its creditors, including those holding more than KRW200 billion (USD169 million) in unsecured claims for unpaid leasing, airport usage, and other operational costs. Some estimates have put the company’s total debts at KRW400 billion (USD338 million).
One claim has been lodged by IMSC, an offshore company suspected of being linked to Eastar Jet founder Lee Sang-jik, who has been charged with crimes of alleged embezzlement and misappropriation. IMSC filed a claim for KRW3.5 billion (USD3 million), according to financial daily The Digital Times.
It is typical in South Korea for a buyer to pay the acquisition price five business days before the creditor meeting, but Sungjeong is considering doing this as early as October in order to dispel doubts over its ability to own and operate the carrier, the Maeil Business Newspaper reported.
Eastar Jet continues to lease four aircraft, two B737-800s from World Star Aviation and two B737-8s from Minsheng Financial Leasing, according to the ch-aviation fleets module. But it is planning to return the two MAX jets, which are still banned from domestic operations, and instead lease one additional B787-800.
