Lawsuit Preparation and Comprehensive Support Requests... Eastar Air's Struggle for Survival

On the 23rd, when Jeju Air announced the termination of the stock purchase agreement for acquiring management rights of Eastar Jet, effectively giving up the acquisition, a sense of silence prevailed at Eastar Jet's headquarters in Gangseo-gu, Seoul. Photo by Jang Jin-hyeong aymsdream@

[Asia Economy Reporter Yoo Je-hoon] Eastar Jet, which is facing bankruptcy due to the collapse of a merger and acquisition (M&A), is preparing a lawsuit against Jeju Air while simultaneously requesting comprehensive support from a third-party investor and local governments to resume operations.

According to the aviation industry on the 24th, Eastar Jet is preparing provisional injunction applications demanding the nullification of the contract termination and enforcement following Jeju Air's announcement of the termination of the stock purchase agreement (SPA) the previous day. This is a natural step after stating that "the contract termination cannot be accepted."

Eastar Jet issued a statement the day before, saying, "Jeju Air's claims differ from what was agreed upon in the contract, and therefore Jeju Air does not have the right to terminate the contract," adding, "We urge the enforcement of the SPA and will take all related measures."

Jeju Air, on the other hand, has stated that Eastar Jet met the conditions for contract termination due to failure to resolve unpaid debts, and it is expected to file lawsuits related to the return of the performance bond (11.5 billion KRW). Both parties have already conducted legal reviews with law firms prior to the contract termination.

Separately from the lawsuit, Eastar Jet is also seeking comprehensive support with the aim of resuming domestic flights. It is known to be negotiating support with Jeollabuk-do Province and Gunsan City, where it has regional ties, while also searching for a third-party investor. Since the Ministry of Land, Infrastructure and Transport mentioned a "Plan B" the day before and demanded self-help measures, Eastar Jet appears to be taking corresponding actions.

Lee Sang-jik, a member of the Democratic Party and the actual major shareholder of Eastar Jet, appeared on KBS Jeonju Radio's "Patrol Jeonbuk" on the 22nd, stating, "Local governments and the government should launch a campaign to save Eastar Jet."

However, it is uncertain whether Eastar Jet’s efforts will materialize. With unpaid debts reaching 170 billion KRW and various controversies surrounding the actual major shareholder Lee, there are doubts about whether anyone will readily step forward.

An industry insider said, "It is estimated that about 30 to 50 billion KRW will be required for Eastar Jet to resume even domestic flights," adding, "Given the significant unpaid debts, it is questionable whether there will be investors willing to inject funds." The insider also noted, "Local governments such as Jeonbuk are not entirely positive about providing support."

For this reason, some point out that a decisive move from Lee, the actual major shareholder, is necessary. Eastar Holdings, the largest shareholder of Eastar Jet (with a 39.6% stake), is 100% owned by Lee’s two children. Kwon Young-guk, head of the Labor Headquarters of the Justice Party (lawyer), stated, "Lee needs to actively step down, such as by relinquishing shares, so that the government can find justification for support."

This content was produced with the assistance of AI translation services.