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Eastar Jet graduates from court-led debt rescheduling program

All News 14:57 March 22, 2022

SEOUL, March 22 (Yonhap) -- Eastar Jet Co., a South Korean low-cost carrier, said Tuesday it has graduated from the court-led debt-rescheduling program in one year after it was placed under court receivership amid the COVID-19 pandemic.

Eastar applied for court receivership in January 2021 as it had failed to find a strategic investor since July 2020, when Jeju Air Co., the country's biggest budget carrier, scrapped its plan to acquire Eastar amid the pandemic.

In November, local property developer Sung Jung Co. acquired an entire stake in Eastar through a rights issue following the budget carrier's overall stock cancellation worth 48.5 billion won (US$40 million).

Sung Jung has injected a total of 112 billion won into Eastar and still has ample cash to help the carrier ride out the prolonged pandemic, Eastar President and CEO Kim You-sang told Yonhap News Agency last month.

Eastar Jet's aircraft are grounded at Incheon International Airport, west of Seoul, on June 23, 2021, in this file photo. (Yonhap)

Eastar has yet to receive air operator certificate (AOC) approval from the transport ministry for flight resumption.

Upon AOC approval, the company aims to initially resume flights on the Gimpo-Jeju route in April or May.

Eastar, a China-focused carrier, currently has three B737-800 chartered planes, sharply down from 23 aircraft before the pandemic hit the airline industry two years ago. The 23 planes served a total of 38 domestic and international routes before the pandemic.

It plans to expand the fleet to six or seven by June, 10 by December this year and 17-18 by the end of next year. Most of the new chartered planes will be the B737-800 or B737-MAX8, the company said.

Eastar has suspended most of its flights on domestic and international routes since March 2020, and its AOC became ineffective in May.

South Korea has two full-service carriers -- Korean Air and Asiana Airlines -- and 10 LCCs -- Jeju Air Co., Jin Air Co., Air Busan Co., T'way Air, Air Seoul Inc., Eastar Jet, Fly Gangwon, Air Premia, Aero K Airlines Co. and Air Incheon Co.

Air Incheon is a cargo-focused carrier, and the nine other low-cost ones are passenger carriers.

Most of the LCCs have suffered snowballing losses since 2019, as travel demand was affected by the pandemic, as well as diplomatic and trade disputes with China and Japan, respectively.

kyongae.choi@yna.co.kr
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