Korea’s Jeju Air to receive $170mn in aid as losses widen

Jeju Air (7C, Jeju) is expected to receive KRW190 billion won (USD170 million) in state aid as part of South Korea’s Key Industry Stabilisation Fund (KISF), sources told the Yonhap News Agency on November 5. Five days later, the budget carrier posted ballooning quarterly losses. Managed and funded by the state-run Korea Development Bank and Export-Import Bank of Korea, the South Korean government’s KRW40 trillion (USD35.8 billion) KISF assisting the country’s backbone industries has so far approved financing to just one airline, Asiana Airlines (OZ, Seoul Incheon), providing it with a capital injection of KRW2.4 trillion (USD2.15 billion). Korean Air (KE, Seoul Incheon) is also preparing to seek KISF financial support, Bloomberg reported in October. For Jeju Air, the country’s biggest LCC by fleet size, the two state banks will reportedly provide KRW120 billion (USD108 million), while the Korea Credit Guarantee Fund, which typically extends credit guarantees for the liabilities of small and medium enterprises, is expected to provide KRW30 billion (USD26.9 million) through “primary collateralised bond obligations”. Jeju Air revealed on November 10 that its net losses for the three months ending in September had deepened to KRW66.8 billion (USD59.8 million) from KRW30.14 billion (USD27 million) in the same period last year. Operating losses widened to KRW70 billion (USD62.7 million) and sales plunged 83% to KRW59.55 billion (USD53.3 million). “Suspended flights on profitable international routes amid the pandemic continued to weigh on the quarterly results,” a company spokesman told Yonhap. Jeju Air operates a fleet of forty-four B737-800s, all but three of which are leased, according to the ch-aviation fleets advanced module. It has resumed services on 52 routes, ten of which are domestic, the ch-aviation capacities module shows. It operated 76 international routes pre-pandemic.