Jeju Air Boosts Short-Term Borrowing Capacity Amid Operational Challenges

Jeju Air, South Korea’s prominent low-cost carrier, has announced a significant increase in its short-term borrowing limit, according to a regulatory filing on August 6. The airline has raised its borrowing ceiling by KRW 42.6 billion (approximately USD 31.2 million), escalating the limit from KRW 289.615 billion (USD 212.2 million) to KRW 332.215 billion (USD 243.4 million).

The regulatory update clarified that the increased borrowing limit encompasses funds from two financial institutions, reflecting the airline’s strategic financial adjustments to bolster liquidity. So far, Jeju Air has utilized KRW 100 billion (USD 73.3 million) of these funds to support its daily operations. Additionally, there is a mention of a separate borrowing facility, against which Jeju Air currently owes KRW 57.4 billion (USD 42 million), and which it is actively repaying.

This financial maneuver comes at a time when Jeju Air reported its first net loss in seven quarters last week, a setback attributed to a combination of high foreign exchange rates, persistent inflation, and ongoing global supply chain disruptions. The airline recorded a second-quarter loss for 2024 of KRW 21.4 billion (USD 15.7 million), despite achieving record quarterly revenue of KRW 967.1 billion (USD 708.6 million).

Despite these financial hurdles, Jeju Air continues to hold a strong market position, being Korea’s largest low-cost carrier (LCC). The airline maintains an extensive network, operating flights to 48 airports across 15 countries with a diverse fleet of 41 aircraft. This includes two B737-8s, thirty-seven B737-800s, and two B737-800(BCF)s. In the face of recent financial results, Jeju Air remains committed to expanding its market share and has announced plans to introduce new routes to Batam and Denpasar, focusing on enhancing its short- and medium-haul service offerings.

As Jeju Air navigates through these challenging economic conditions, its strategic increase in borrowing capacity is poised to provide the financial flexibility needed to sustain operations and pursue growth opportunities in the competitive aviation market.

Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com