Jeju Air Requests Eastar Jet to "Fulfill Precedent Conditions Within 10 Business Days"

"Contract May Be Terminated If Precedent Conditions Are Not Met Within 10 Business Days"

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Je-hoon] Jeju Air has reportedly sent an official letter to Eastar Jet stating that "if all the preconditions for acquisition are not fulfilled within 10 business days, the contract may be terminated." Industry insiders are analyzing this as a step toward an effective 'contract cancellation.'

According to the aviation industry on the 2nd, Jeju Air responded with this content regarding the letter Eastar Jet sent on the 30th of last month, claiming that "all preconditions for acquisition have been met."

Earlier, Eastar Jet had sent an official letter to Jeju Air to resume negotiations after Lee Sang-jik, a member of the Democratic Party of Korea and the actual owner, pledged to donate all shares held through Eastar Holdings. At that time, Eastar Jet requested face-to-face negotiations, stating that various contractual preconditions for acquisition had been resolved.

However, Jeju Air, after reviewing the matter through law firms, concluded that the preconditions had not been met and conveyed the position that if all issues are not resolved within 10 business days, the contract could be terminated.

The specific details of the contractual preconditions have not been disclosed, but it is known to include the resolution of the payment guarantee for Thai Eastar Jet (31 million USD). Additionally, considering unpaid wages amounting to 25 billion KRW accumulated since February, as well as operation fees and office rent, the amount Eastar Jet needs to fulfill the preconditions is reported to be around 80 to 100 billion KRW.

A Jeju Air official explained, "The requirement that the preconditions must be fulfilled has been consistently demanded since the contract was made, and even before that."

For Eastar Jet, which has not even been able to resolve unpaid wages on its own, fulfilling such demands seems difficult. At a previous press conference, Eastar Jet’s management stated, "Even if we want to resolve unpaid wages, we lack the financial capacity, so if the M&A proceeds and sale proceeds come out, we think we should at least use that to settle wages first."