Korea’s Jeju Air to raise $180mn via stock offering

Jeju Air (7C, Jeju) will sell stocks to raise KRW210 billion won (USD180 million), it announced in a stock exchange disclosure on August 13, with the proceeds to be deployed mainly to finance its operations.

According to the filing, the company will issue 11.2653 million new common shares at a price of KRW18,650 (USD16) per share. The stocks will be sold to the company’s shareholders including its biggest, South Korean household and personal care product maker Aekyung Group.

The expected date of confirmation for the issue has been set at October 13, the scheduled subscription date is October 18, and the expected listing date for the new shares is November 12.

On the same day, the embattled low-cost carrier announced it had recorded KRW75.1 billion (USD64.3 million) in sales and, as a consequence, a KRW71.2 billion (USD61 million) operating loss for the second quarter of 2021.

The turnover figure was a 108% increase from the dismal results for the same period last year when flight operations were crippled with the coronavirus outbreak, but the loss was worse, by 16% year-on-year.

Jeju Air continues to have no choice but to respond to ongoing Covid-19 restrictions on international travel out of South Korea by expanding domestic flights in a hyper-competitive market. As a Jeju Air representative told the Maeil Business Newspaper: “The second quarter of last year was very bad, and this year the situation has not changed.”

Meanwhile, the Jeju Provincial Council, the local council of Jeju Province, extended a helping hand to the airline on August 10 by confirming a reduction in property tax from 0.3% to 0.25% “for airlines headquartered on Jeju Island”, of which there is only one, for a further year until December 31, 2021, Yonhap News Agency reported. As a result, the carrier is expected to save about KRW144 million (USD123 million). The municipality owns a 6.1% stake in Jeju Air.