July 23, 2020 11:33
Jeju Air has abandoned a plan to buy rival budget carrier Eastar Jet after a deadline to clinch the deal expired.
Jeju Air on Thursday morning announced that it is canceling the deal which was initially signed in December last year before the coronavirus crisis hit.
The deal fell through because Eastar Jet failed to settle its outstanding lease payments and back wages of between W80-100 billion by midnight Wednesday (US$1=W1,198). Jeju Air warned last week that Eastar Jet's failure to abide by the debt-redemption agreement would justify canceling the deal.
Eastar Jet is widely expected to file for bankruptcy. Industry watchers believe the budget carrier will be sold off in pieces rather than resuscitated and its 1,600 employees will be out of work.
The two budget carriers now face a likely legal dispute over the W11.95 billion Jeju Air already paid to Eastar Jet as a downpayment.
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