Eastar Jet’s 737 MAX 8 (Photo: Boeing)
The Seoul Bankruptcy Court has given a green light to Sung Jung, a South Korean property developer, to acquire Eastar Jet — a struggling low-cost airline. The developer is trying to acquire an 80% stake in Eastar Jet for 108.7 billion South Korean wons ($97 million).
Eastar Jet is expected to receive an air operator certificate (AOC) from the transport ministry by January. The original AOC has been ineffective since May 2020.
Earlier, an airline’s spokesman said, “It will focus on putting business back on track as soon as possible.” The airline is forecasted to resume its services in February, around the Lunar New Year holidays in South Korea.
The court demanded the airline to pay the unpaid salaries and retirement allowances to the current and former employees first, which cost about 70 billion South Korean wons. In response to the pandemic, Eastar Jet has sacked 700 staff. The airline owned a team of 1,600 employees before the pandemic.
Eastar Jet had difficulty finding an investor since Jeju Air gave up its acquisition of the carrier during the pandemic. Jeju Air initially acquired 51% of Eastar Jet for 69.5 billion South Korean wons in December 2019. In the wake of the pandemic, Jeju Air made a U-turn on the acquisition of Eastar Jet, putting the low-cost airline at risk.
Meanwhile, Jeju Air has reported an 83.03 billion South Korean wons loss in the third quarter of the year. “Air passenger traffic declined as the country applied stricter distancing rules following the fourth wave of the pandemic. High oil prices and a weak won also weighed on the bottom line,” an airline’s spokesman said. Jeju Air is the largest budget carrier in the country.
Although Jeju Air was in the red in the last quarter, the South Korean aviation industry is experiencing a slow recovery. Following the successful vaccine program in the country, Jeju Air has started operating a weekly flight between Seoul and Chiang Mai, Thailand for golf tourists. The Thai government has announced a new program named “Test & go”, allowing the fully vaccinated travelers to be exempted from quarantining.
In the meantime, as a result of the strong cargo demand, Korean Air— the country’s flag carrier — reported a 438.6 billion South Korean wons in operating profit for the third quarter of 2021. The airline also forecasts a strong cargo demand in the fourth quarter of the year.
Korean Air has resumed its three flights a week to Honolulu in November. According to local media, the aviation industry is seeing an uptick in travel demand to Hawaii. Meanwhile, the acquisition of Asiana Airlines is in the cards to be completed this year.
Earlier, T’way Air — another budget carrier in the country — leased three A330-300s, and the airline’s instructors have finished a training course at Airbus Training Center in France. T’way is expected to introduce new routes, such as Sydney, Honolulu and Singapore.
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