Eastar Jet in Sale Negotiations with Honam Mid-sized Companies... Outline Expected as Early as This Week

Key Issues Including COVID-19 and Unpaid Funds

[Asia Economy Reporter Yu Je-hoon] As the suspension of operations of low-cost carrier (LCC) Eastar Jet continues for a long time, it has been reported that a mid-sized company based in Honam is negotiating its acquisition. It is expected that a decision will be made as early as this week.

According to the industry on the 28th, a mid-sized company with roots in Honam is conducting sale negotiations with Eastar Jet. An industry insider explained, "Discussions are underway to finalize the outline soon," adding, "We are in the final stages of narrowing differences."

Eastar Jet, ranked around 5th to 6th among domestic airlines, had been pursuing a merger and acquisition (M&A) with Jeju Air last December, but the plan was ultimately canceled in July due to the rapid downturn in the aviation industry caused by the COVID-19 pandemic.

Since then, Eastar Jet has downsized by laying off about 600 employees and disposing of most of its aircraft. It also selected law firm Yulchon, Deloitte Anjin, and Heungkuk Securities as sale advisors and sought potential buyers, but has not achieved significant results.

The new potential acquirer is reportedly carefully considering the acquisition, taking into account various unpaid debts amounting to 240 billion KRW and the pace of recovery in the aviation industry following COVID-19.

If the acquisition is finalized, Eastar Jet and the acquirer are expected to proceed with legal rehabilitation procedures through agreements such as a memorandum of understanding (MOU). At the same time, they plan to prepare for resuming operations by reacquiring the Air Operator Certificate (AOC) through the acquirer's capital injection.

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