Jeju Air signs $45 mln deal to acquire Eastar Jet

SEOUL, March 2 (Yonhap) -- Jeju Air Co., South Korea's largest low-cost carrier, said Monday it has signed a deal to acquire Eastar Jet for 54.5 billion won (US$45 million) as part of its expansion strategy.

Jeju Air was originally planning to sign a share purchase agreement with Eastar Holdings by December to acquire a controlling 51.17 percent stake in the carrier for 69.5 billion.

"We have decided to acquire Eastar Jet to be better positioned to compete with rivals in the highly competitive budget carrier market despite uncertainties surrounding the spreading coronavirus outbreak and its impact on the airline business," a company spokesman said over the phone.

The acquisition price was revised down at Jeju Air's request after it conducted due diligence on Eastar Jet last month, he said.

Jeju Air has said the acquisition will help it gain a bigger market share and strengthen the company's competitiveness in global markets.

South Korea has two full-service carriers -- Korean Air and Asiana Airlines Inc. -- and seven low-cost carriers -- Jeju Air, Jin Air, Air Busan Co., Air Seoul Inc., Eastar Jet, T'way and Fly Gangwon.

Two more LCCs -- Air Premia Co. and Aero K Airlines Co. -- are expected to join the market next year, bringing the country's total number of LCCs to nine.

AK Holdings Inc., the holding firm of South Korean retail conglomerate Aekyung Group, holds a 59.93 percent stake in Jeju Air.

kyongae.choi@yna.co.kr
(END)