The Aviation Industry Barely Survived This Year... Fighting for Funding Survival

Asiana and Jeju Followed by Korean Air Soon Joining the Kian Fund Lineup

On the 14th, amid the ongoing COVID-19 pandemic, the international terminal at Gimpo International Airport in Gangseo-gu, Seoul, was quiet. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Yoo Je-hoon] This year, the aviation industry, which is experiencing an unprecedented recession due to the novel coronavirus infection (COVID-19), is putting all its efforts into securing funding for survival next year.

According to the industry on the 18th, major domestic airlines such as Korean Air, Asiana Airlines, and Jeju Air are knocking on the door of the Industrial Infrastructure Fund (IIF) to secure the necessary funds.

Korean Air has implemented self-help plans this year, including employee (paid) leave, the sale of its in-flight meal and in-flight sales business (990.6 billion KRW), and a paid-in capital increase (1.1 trillion KRW). It has also received 1.2 trillion KRW in support from the Korea Development Bank and the Export-Import Bank of Korea on the condition of a 2 trillion KRW capital increase.

However, as the COVID-19 pandemic prolongs, the company appears to be focusing on securing funds for future survival. Korean Air is reportedly planning to secure about 1.5 trillion KRW through the soon-to-be-applied IIF and the sale of land in Songhyeon-dong, Jongno-gu.

Asiana Airlines is also expected to receive part of the IIF support (300 billion KRW) soon. Asiana Airlines has already exhausted most of the various government loans amounting to 3.3 trillion KRW, making IIF funding inevitable. Previously, the IIF Management Committee approved a support limit of about 2.4 trillion KRW for the company.

Jeju Air also became the first low-cost carrier (LCC) to apply for the IIF. Jeju Air implemented a paid-in capital increase (about 170 billion KRW) and employee paid leave this year as self-help measures, but it is evaluated that this is insufficient to cover fixed costs of about 30 to 40 billion KRW per month. The industry expects that the amount Jeju Air applied for from the IIF will be around 170 billion KRW.

Other airlines are also taking self-help measures. T'way Air has launched a 'second attempt' at a paid-in capital increase, and Jin Air and Air Busan are also pushing for paid-in capital increases. An industry official said, "It is uncertain whether demand will recover next year," adding, "The survival of each company ultimately depends on securing funds."