Jeju Air: "Eastar Management and Major Shareholders Must Take Responsibility for Resolving Wage Arrears"

[Asia Economy Reporter Yu Je-hoon] Jeju Air has reportedly conveyed to the current management and major shareholders of Eastar Jet the intention that they should take responsibility and make efforts to resolve the recent controversy over Eastar Jet's unpaid wages. According to industry sources on the 26th, Jeju Air recently communicated this intention to Eastar Jet to ensure job security for workers and resolve unpaid wages.

Eastar Jet's financial condition rapidly deteriorated due to the COVID-19 pandemic, and since February, it has been unable to pay 60% of wages, and from March onward, it has failed to pay full wages. Recently, it accepted voluntary retirement applications and laid off about 60 employees, but was unable to pay severance and unpaid wages on time. Eastar Jet's total capital in the first quarter of this year was -104.2 billion KRW, indicating complete capital erosion.

A Jeju Air official explained, "We understand that Jeju Air conveyed the message that the management and major shareholders should responsibly address the issue of unpaid wages," adding, "However, the manner of taking responsibility was not discussed."

This is interpreted as a response to claims that Jeju Air demanded Eastar Holdings, the major shareholder of Eastar Jet, to contribute personal funds to resolve unpaid wages. Eastar Holdings is a company wholly owned by the two children of Lee Sang-jik, a member-elect of the Democratic Party of Korea.

Meanwhile, Jeju Air stated that its intention to acquire Eastar Jet remains unchanged despite the situation. Jeju Air said, "The acquisition process is proceeding as planned," adding, "The overseas merger review must be completed and the conditions precedent to the stock purchase agreement must be fulfilled."