Budget Airlines Scramble to Top up Capital

  • By Song Hye-jin

    July 20, 2021 13:08

    Low-cost carriers are desperate for cash as prospects fade for an imminent return to normal.

    Korean Air and Asiana Airlines were able to maintain earnings despite plummeting traveler numbers by boosting cargo volume, but budget airlines need funding from other sources to stay afloat.

    Jeju Air said Monday that it will reduce the value of ordinary shares from W5,000 to W1,000 next month and then seek a W200 billion capital injection on Sept. 1 (US$1=W1,153).

    That will reduce its paid-in capital from W192.4 billion to W38.4 billion before new stocks are issued to make ready cash available so it can avoid bankruptcy. The plan will be put to a vote at a shareholders' meeting on Aug. 13.

    Jeju Air check-in counters are closed at Incheon International Airport on Monday. /Newsis

    Air Busan is also seeking to increase capital by issuing 111.85 million new shares to raise W146.3 billion to cover operating costs and W103.6 billion to repay debts.

    Jin Air is slashing its fleet from 28 to 23 to reduce fixed costs. Industry insiders expect Jin Air to seek a capital increase ahead of parent Korean Air's acquisition of cash-strapped Asiana.

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