Jeju Air Maintains Financial Stability After Crash

Jeju Air (7C, Jeju), South Korea’s leading low-cost carrier, has firmly denied claims of financial instability following the tragic crash of one of its Boeing 737-800 aircraft on December 29, 2024. The accident at Muan Airport resulted in the loss of 179 lives and triggered a massive surge in ticket cancellations, with 68,000 cancellations recorded within the first 48 hours post-incident.

Song Kyung-hoon, head of Jeju Air’s management support division, addressed the media last week, asserting that the airline remains financially sound despite the aftermath of the crash. “New bookings are continuing to come in, albeit at a reduced rate, and we are promptly processing all refund requests,” Song stated. He further assured stakeholders that Jeju Air’s ongoing investment plans, including aircraft acquisitions, are set to proceed without any delays.

However, industry insiders cited by The Korea Herald suggest that Jeju Air may face significant short-term financial pressures. According to recent regulatory filings, the airline had advance ticket revenues totaling approximately KRW260.6 billion (USD179 million) at the time of the crash. A substantial portion of this revenue is expected to be refunded to affected passengers, potentially impacting the airline’s financial health.

As of September 30, 2024, Jeju Air reported holding KRW391.5 billion (USD269 million) in assets, which includes KRW181 billion (USD124 million) in cash or cash equivalents. In contrast, the airline’s liabilities stood at KRW993.7 billion (USD682 million), resulting in a working capital ratio of 0.39—significantly below the industry benchmark for financial health. Additionally, Jeju Air faces the repayment of KRW242.1 billion (USD165 million) in short-term borrowings by September 30, 2025. Experts widely expect the airline to renegotiate these repayment terms to mitigate financial pressure.

Despite these challenges, Song assured that the airline would utilize its cash reserves to handle refund payouts, maintaining operational continuity. Meanwhile, Muan Airport remains closed until at least January 14, 2025, as officials have designated it a special disaster zone. Typically, Muan handles around 10,000 passengers weekly and accommodates over 50 scheduled flights. Jeju Air is the second largest operator at the airport, following Jin Air (LJ, Jeju).

The crash has had a ripple effect across the aviation sector, with Jeju Air’s operations facing scrutiny and regulatory attention. The immediate focus remains on passenger safety, fleet integrity, and maintaining trust among travelers.

Looking forward, Jeju Air plans to stabilize its operations while addressing the operational and financial repercussions of the crash. The airline continues to emphasize its commitment to safety and customer service, aiming to restore normalcy and confidence in its services as it navigates through the recovery phase.

While Jeju Air publicly denies being under financial pressure post-crash, industry reports and regulatory filings indicate potential short-term challenges. The airline’s ability to manage refund obligations and renegotiate financial liabilities will be crucial in determining its financial trajectory as it works to recover from the tragic incident and resume its role in the competitive aviation market.

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