South Korea imposes $3.23mn in fines on four airlines

Korea’s Eastar Jet to file for receivership

Eastar Jet (ESR, Seoul Gimpo) plans to file for court receivership by the end of January in a last-ditch effort to find a new investor, an airline representative revealed to MTN News and Yonhap News Agency on January 13.

One step short of bankruptcy in South Korea, receivership means that a court decides whether a company can be saved and, if so, how.

The financially challenged low-cost carrier, still without an AOC, has so far not succeeded in hooking a strategic investor since July 2020, when Jeju Air (7C, Jeju) scrapped a plan to acquire its smaller competitor.

Earlier in January 2021, it claimed to be in the final stages of negotiations with an unnamed construction company in Korea’s southwestern region of Honam, but these talks have now ended.

“Eastar aims to find a new investor through a court-led rehabilitation scheme,” the representative of the airline said, adding that there was a possibility for rehabilitation rather than liquidation.

The goal is to cancel some of Eastar Jet’s debt during the...

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Korea’s Jeju Air gets $29.4mn aid but must wait for the rest

South Korea will provide KRW32.1 billion won (USD29.4 million) in assistance to Jeju Air (7C, Jeju) to help it stay afloat amid the slump in demand, the state-run Korea Development Bank, which operates the country’s Key Industry Stabilisation Fund (KISF), said in a statement on December 10.

The amount consists of KRW25.7 billion (USD23.5 million) in loans and a KRW6.4 billion (USD5.9 million) investment through the acquisition of convertible bonds.

On its part, the low-cost carrier is required to take steps any other company must adhere to on accepting these funds, such as maintaining at least 90% of its employees over the next six months, suspending dividends and treasury stock purchases, prohibiting pay rises for managers with an annual salary of KRW200 million (USD183,000) or more, and making efforts to improve the company’s financial status.

The KISF’s management council began discussing aid for Jeju Air in October to assess the feasibility and urgency of support. The carrier’s main creditor, state-owned Export-Import Bank, conducted due diligence with an external accounting firm, estimating the airline’s required...