South Korea’s antitrust watchdog has approved low-cost airline Jeju Air’s takeover of the management of struggling Eastar Jet, officials said Thursday, April 23.
Early last month, Jeju Air signed a deal with Eastar Holdings, the largest shareholder of Eastar Jet, to acquire the airline for 54.5 billion won (US$45 million). The firm acquired 4,971,000 common shares for a 51.17% stake.
“The Fair Trade Commission conducted the review as promptly as possible, considering the circumstances of the airline industry suffering from the aftermath of the pandemic,” the KFTC stated.
As a result of the review, Eastar Jet was recognized as an “unrecoverable company” under the Fair Trade Act and was granted an exception to the restriction on competition.
From a competitive perspective, it was considered to be better to approve the tie-up to continue to use Easter Jet’s assets than to remove the airline, which is not possible to revive, the authorities said.
“Under these circumstances, it was considered to be difficult to repay outstanding debts amounting to 115.2 billion won at the end of March 2020, including aircraft lease fees, airport fees, air oil purchase costs and wages. Its tangible assets were only 45 billion won at the end of 2019,” the KFTC stated.
Full Content: Korea Herald
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