Discussion on Support Fund for Jeju Air... 'Support No. 2' Decision Deferred to Next Month

Jeju Air Hesitates to Apply for Support Amid High Interest Rates
Application Expected After Confirmation Possibly Next Week

Jeju Air 'Incheon to Incheon' sightseeing flight passengers are watching a flight attendant's magic show on board on the 23rd. On this day, Jeju Air conducted a sightseeing flight for the general public that circled over domestic airspace before returning. / Photo by Moon Honam munonam@

[Asia Economy Reporter Jo Gang-wook] Discussions on the support of the Industrial Stabilization Fund for Jeju Air, the largest low-cost carrier (LCC) in South Korea, will take place on the 29th. However, since Jeju Air's application schedule for the fund has been delayed, it is highly likely that the title of the 'second supported company' will be postponed until next month.

According to financial sources, the Industrial Stabilization Fund Operation Deliberation Committee will hold a meeting on this day to discuss current issues related to the aviation industry, including Jeju Air and Korean Air. The committee also held a meeting on the 15th to assess the status of LCCs. Jeju Air has not yet applied for the fund.

A representative of the Industrial Stabilization Fund stated, "Jeju Air has not applied for the fund as of now," adding, "The committee plans to discuss aviation industry issues, including Jeju Air, during today's meeting."

If Jeju Air receives support from the Industrial Stabilization Fund, it will become the second company to receive support following Asiana Airlines. It will be the first LCC to be supported. Among LCCs, only Jeju Air and Air Busan meet the requirements to apply for the fund based on their business scale.

It is known that the necessary funds for Jeju Air, calculated through an audit by an accounting firm, amount to approximately 170 billion KRW.

Korean Air is also preparing to apply for the fund, with the expected support amount around 1 trillion KRW.

However, neither company has applied for the fund yet. Both sides have not disclosed specific reasons, citing that consultations with related institutions such as the Korea Development Bank have not been finalized, but the main cause is believed to be the high interest rate set at 7%, which is higher than expected.

Because of this, there is speculation that the policy finance method implemented in the first half of this year might be reconsidered. Jeju Air previously received short-term loans of 40 billion KRW, 30 billion KRW, and 10 billion KRW from the Korea Development Bank, the Export-Import Bank of Korea, and Hana Bank, respectively, through the government's emergency support plan for the aviation sector. The interest rates were around 2-3%, significantly lower than the Industrial Stabilization Fund rates.

Meanwhile, financial circles expect Jeju Air to record an operating loss of approximately 70 billion KRW in the third quarter of this year.