▲ Eastar Jet President and CEO Kim You-sang poses for a photo at the budget carrier's office in Magok, western Seoul, after an interview with Yonhap News Agency on Feb. 9, 2022. (Yonhap)
▲ Eastar Jet's aircraft are grounded at Incheon International Airport, west of Seoul, on June 23, 2021, in this file photo. (Yonhap)

(Yonhap Interview) Eastar Jet-fleet plan

(Yonhap Interview) Eastar financially capable of expanding fleet to 18 by 2023: CEO

By Choi Kyong-ae

SEOUL, Feb. 10 (Yonhap) -- Eastar Jet Co., a South Korean low-cost carrier whose rehabilitation plan obtained a court's approval late last year, carries no debt and is financially capable of expanding its fleet to 18 aircraft by 2023, the company's chief executive has said.

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 COVID-19 pandemic.

"Sung Jung submitted documents that show its strong willingness to invest more in Eastar and detailed plans to the transport ministry last month, along with Eastar's application for an air operator certificate (AOC) from the ministry for flight resumption," Eastar President and CEO Kim You-sang said in a recent interview with Yonhap News Agency.

If necessary, Sung Jung may work with local asset management companies, which have shown interest in investing in Eastar as financial investors, the executive said.

Kim expected the Ministry of Land, Infrastructure and Transport to deliver the AOC approval to Eastar next month.

"Upon AOC approval, we are targeting to initially resume flights on the Gimpo-Jeju route in late March or early April," the 55-year-old executive said.

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 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 B737-800 or B737-MAX8, he said.

Asked about the impact of the South Korean regulator's upcoming "conditional" approval of the integration between Korean Air Lines Co. and Asiana Airlines Inc. on the LCCs' businesses, he said it will help alleviate monopoly concerns, as the country's two biggest carriers are required to return some of their redundant airport slots and transportation rights.

The Fair Trade Commission is set to approve the integration plan in coming days, with endorsements yet to come from six other countries -- China, Japan, Britain, Australia, the European Union and the United States.

"LCCs like Air Premia and T'way Air are adding large-sized planes to their fleet to serve long-haul routes. Jeju Air has recently announced similar plans. We will also consider adopting large-sized aircraft," he said.

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

It had had difficulties finding a strategic investor since July 2020, when Jeju Air Co., the country's biggest budget carrier, scrapped its plan to acquire the carrier amid the prolonged pandemic.

Eastar applied for court receivership in January 2021, and the bankruptcy court approved the corporate rehabilitation process for the carrier the following month.

The court later ordered preservation measures and comprehensive prohibition to prevent creditors from seizing or selling company assets and to freeze all bonds before the carrier's rehabilitation proceedings.

Last month, Eastar founder Lee Sang-jik, formerly a member of the ruling Democratic Party of Korea, was sentenced to six years in prison for embezzlement of company funds and breach of trust.

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 snowballed losses since 2019, as travel demand was affected by the pandemic, as well as diplomatic and trade disputes with China and Japan, respectively.

(END)

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