"Eastar Holdings Files Lawsuit to Enforce Stock Purchase Against Jeju Air"

CEO Choi Jong-gu "Pilot Union Agrees on Opposition to Unpaid Leave and Restructuring"

CEO Choi Jong-gu of Eastar Jet is entering the extraordinary general meeting held on the 9th at Eastar Jet headquarters in Gangseo-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Yoo Je-hoon] Eastar Holdings, the major shareholder of Eastar Air, has filed a lawsuit demanding the enforcement of stock purchase against Jeju Air, which withdrew its intention for a merger and acquisition (M&A).

Choi Jong-gu, CEO of Eastar Air, issued a statement on the 17th, saying, "Today, Eastar Holdings filed a lawsuit demanding the enforcement of stock purchase against Jeju Air," and added, "If we win the case, we plan to resolve unpaid wage claims and other issues."

Regarding the recent restructuring involving about 605 employees that has caused internal and external backlash, CEO Choi said, "In order to save the company and preserve jobs, we proposed to employees on July 24 to take unpaid leave temporarily, but the pilots' labor union rejected this the next day," and continued, "Afterwards, while proceeding with restructuring, we promised reemployment, and the labor union chairman also participated in the workers' representative meeting to reach an agreement."

He also denied claims that unpaid employment insurance premiums (about 500 million KRW) prevented the company from receiving employment retention subsidies, stating, "Employment retention subsidies are requested from the government only after all wages are paid, so if there are unpaid wages, the application cannot be made," and added, "To receive support, all unpaid wages amounting to hundreds of billions must be resolved."

Furthermore, CEO Choi shifted the responsibility for the unpaid wages and related issues to Jeju Air. He said, "The unpaid wages are directly caused by Jeju Air's shutdown demand during the M&A process and the resulting sales suspension," and stated, "If there had been no business suspension and sales freeze due to Jeju Air's demands, we would not have been driven into the current situation."

Meanwhile, with the initiation of this lawsuit demanding enforcement of stock purchase, the legal battle over the failed M&A between Eastar Holdings and Jeju Air is expected to intensify. Jeju Air canceled the stock purchase agreement (SPA) in July, citing unmet preconditions for the acquisition, while Eastar Holdings and Eastar Air do not acknowledge this. Recently, they also held an extraordinary shareholders' meeting demanding the appointment of directors and auditors from Jeju Air's side.