The Industrial Stabilization Fund Approves Additional 150 Billion KRW Support for Jeju Air

Obligation to Maintain Employment and Prevent Moral Hazard

[Asia Economy Reporter Kim Jin-ho] The Industrial Stabilization Fund held the '42nd Fund Management Committee' at the Korea Development Bank headquarters in Yeouido, Seoul, on the 9th, and announced that it approved additional financial support for Jeju Air.

The additional support amount is 150 billion KRW to cover liquidity shortages for next year. The support method includes an operating fund loan of 120 billion KRW (80%) and a 30 billion KRW subscription to perpetual convertible bonds (CB). Including the previously provided support of 32.1 billion KRW, a total of 182.1 billion KRW will be invested in Jeju Air.

Before the additional support, Jeju Air completed self-help efforts such as a paid-in capital increase involving the major shareholder (AK Holdings) and labor cost reductions. After the additional support, under special agreements, the company will bear obligations such as employment maintenance, management improvement efforts, and prevention of moral hazard.

The employment maintenance obligation requires maintaining the number of employees as of May 1 as much as possible. To prevent moral hazard, during the fund support period, profit dividends to shareholders and share buybacks are prohibited, and high-income executives' salaries will be frozen.

Since its launch at the end of May last year, the Industrial Stabilization Fund has supported a total of 798.2 billion KRW, including 300 billion KRW for Asiana Airlines, 182.1 billion KRW for Jeju Air, and 316.1 billion KRW for 119 cooperating companies in the key industries.

Meanwhile, considering the ongoing spread of COVID-19, the support period of the Industrial Stabilization Fund has been extended by one year from the end of this month to the end of next year, and it will be operated on a scale of 10 trillion KRW. Additionally, the support program for cooperating companies will also be extended by six months until the end of June next year.