South Korea’s biggest low-cost carrier Jeju Air Co. could become the second candidate to receive funding from a 40 trillion won ($34.1 billion) state reserve set aside out to protect large companies from the ruins of pandemic.
Jeju Air could file for the necessary funding as the government and state lenders are positively considering including the leader from LCC in the bailout program originally laid out for big airliners like Korean Air Lines and Asiana Airlines with debt exceeding over 500 billion won and payroll above 300.
Although the airline industry is labeled “special” segment in need of state relief, Jeju Air and other budget carriers have been asked to turn to commercial lenders backed by 135 trillion relief programs.
Even if Jeju Air is included in the program, whether it will end up applying for it remains uncertain due to the rigid requirements of sustaining 90 percent of the payroll for six months and suspending shareholder reward program like dividend payout or buyback.
So far, Asiana has been the sole applicant of the state bailout.
It has been promised of 2.4 trillion won support – 1.9 trillion won in loans for operation and 480 billion won in purchase of convertible bonds – after its M&A attempt officially fell through recently.
Korean Air Lines Co. was expected to take up the first check but it has held it off on signs of recovering business from the second quarter due to brisk cargo demand. If the pandemic crisis prolongs, it may have to turn to state bailout, experts say.
Jeju Air shares fell 3.07 percent to close Thursday at 12,650 won.
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]