Eastar Jet Faces 'Cheopcheopsanjung'... Buzzing Over Plans for Relaunch

Pilot Union "Will File for Court Receivership" Management "Acquirer Confirmation Comes First"

Employees are entering the temporary shareholders' meeting held on the 9th at the Eastar Jet headquarters in Gangseo-gu, Seoul, amid growing concerns over mass unemployment in the aviation industry following Eastar Jet's notification of layoffs to 605 employees. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Yu Je-hoon] Eastar Jet, which is on the brink of collapse due to a failed merger and acquisition (M&A), is experiencing internal conflict over plans for a relaunch. While the management side aims to find a buyer and revive the company, the pilots' labor union has proposed filing for court receivership based on wage claims, leading to a direct confrontation.

According to the aviation industry on the 3rd, Eastar Jet has selected Deloitte Anjin, law firm Yulchon, and Heungkuk Securities as its sales agents and aims to sign a memorandum of understanding (MOU) with an acquiring company within this month. It is known that eight companies and private equity funds have shown interest in acquisition.

Prior to this, Eastar Jet carried out layoffs of 605 employees. This downsizing was initiated on the premise of "re-employment" to facilitate a smooth acquisition process. Eastar Jet plans to apply for an Air Operator Certificate (AOC) with aviation authorities and consider resuming domestic flights once the MOU with the acquiring company is finalized.

However, it is uncertain whether the acquisition process will proceed as planned by the management. Other low-cost carriers (LCCs) are also up for sale, and risks related to the spread of the novel coronavirus disease (COVID-19) have not yet been resolved. In particular, political issues related to founder and Democratic Party lawmaker Lee Sang-jik, as well as conflicts with the labor union, remain.

In response to these developments, the pilots' union is strongly opposing. They are demanding the withdrawal of layoffs and are reportedly consulting with law firms to consider filing for court receivership early this month based on wage claims.

As labor-management conflicts intensify, emotions between the two sides are also escalating. The union previously reported lawmaker Lee to the prosecution for tax evasion and false statements under the Public Official Election Act, and the management recently issued a statement saying, "We can no longer tolerate the union's false fabrications," and "We will hold them accountable to the fullest extent of civil and criminal law."

The labor-management conflict is also causing internal strife within the union. The Eastar Jet employee representative group stated, "The court receivership advocated by the pilots' union carries a high risk of leading to liquidation, yet the union chairman's opinion is being portrayed as the opinion of all employees," and "Employees deeply regret the union's actions that negatively affect the resale efforts through discord and media play."

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