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SEOUL, July 23 (Yonhap) -- Jeju Air Co., South Korea's biggest low-cost carrier, said Thursday it has decided to scrap a deal to acquire smaller rival Eastar Jet Co. amid the new coronavirus' impact on the airline industry.
Jeju Air said the COVID-19 pandemic-related uncertainties remain high, a key reason for the breakdown of the deal.
Eastar was not immediately available for comment.
In March, Jeju Air signed a deal to acquire a controlling 51.17 percent stake in Eastar Jet from Eastar Holdings for 54.5 billion won (US$45.53 million) as part of its expansion strategy despite the COVID-19 pandemic.
But the deal had been on the verge of breaking down, as Jeju Air and Eastar have been making little progress in talks over debt payments amid the losses incurred by the virus outbreak.
On July 1, Jeju Air sent a letter to Eastar to demand overall debt payments, estimated at up to 100 billion won, as a condition for proceeding with the deal, which could not be met by Eastar.
The takeover deal had been at a risk of falling through despite state support as the two sides failed to narrow differences on terms of the contract.
AK Holdings, the holding firm of South Korean retail conglomerate Aekyung Group, holds a 56.94 percent stake in Jeju Air.
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