VIG Partners Acquires Eastar Jet with 100 Billion KRW Investment

Securing 100% Stake Through New Capital Injection
Ensuring Financial Soundness and Improving Governance
Jo Jung-seok, Former Asiana Airlines Executive Director, Appointed as CEO

[Asia Economy Reporter Kwangho Lee] Domestic low-cost carrier Eastar Jet is set to be acquired by the private equity firm VIG Partners.

On the 6th, VIG Partners signed a contract to acquire 100% of Eastar Jet's shares. By the end of this month, VIG Partners plans to improve the company's financial structure and modernize its management system by injecting more than 100 billion KRW through a third-party allotment capital increase in Eastar Jet.

Founded in 2007, Eastar Jet launched its Gimpo-Jeju route in January 2009 and entered the international market in December of the same year. Since then, it surpassed 10 million cumulative passengers in 2014 and won first place in the low-cost carrier category of the Korea Service Quality Index in 2017, continuing solid growth and establishing its position as a trusted low-cost airline among the public.

However, the airline faced crises such as the suspension of its Air Operator Certificate (AOC) during the COVID-19 pandemic and entering rehabilitation procedures. In particular, although the rehabilitation process ended after about a year in March last year, the company remained in a state of capital erosion, necessitating additional capital injection to restore normal management through financial restructuring.

Through VIG Partners’ large-scale new investment, Eastar Jet will resolve its capital erosion and establish the soundest financial structure since its founding. Additionally, based on a more transparent governance structure, the company plans to introduce new aircraft (B737-8) and establish an advanced operational system to provide high-quality customer service.

The previous major shareholders, Seongjeong and Baekje Country Club, are reported to have made the decisive move to execute this transaction for the normalization and development of Eastar Jet. Both Seongjeong, Baekje Country Club, and VIG Partners share the view that Eastar Jet’s successful resurgence is a prerequisite for the domestic aviation industry to rise to a globally recognized leading position.

Following this investment, former Asiana Airlines Executive Director Jo Joong-seok will be appointed as the new CEO of Eastar Jet. CEO Jo is a professional manager with extensive experience in the aviation industry, having served as head of the Korea regional headquarters at Asiana Airlines and as head of the management division during the establishment of Air Busan. He is recognized for his expertise in various fields including sales, marketing, finance, and strategic planning within the airline industry.

New CEO Jo stated, “I am pleased to be appointed as the CEO of Eastar Jet, which has played a leading role in popularizing air travel by offering attractive prices and high-quality services.” He added, “Although many challenges are expected this year due to rapid changes in the macroeconomic environment and the COVID-19 crisis, I will do my best to ensure Eastar Jet’s resurgence contributes to the development of the domestic aviation industry.”

Shin Chang-hoon, Vice President of VIG Partners, said, “Eastar Jet is a company that has created a successful history in Korea’s low-cost carrier industry. Although the macroeconomic outlook is unstable, this investment will significantly improve the financial structure, enabling the company to respond quickly and flexibly to future environmental changes.” He added, “We have confidence in the company’s long-term growth potential and expect 2023 to be the year Eastar Jet makes its comeback.”

After the deal closes, VIG Partners plans to actively invest in new aircraft acquisitions and route expansions. This acquisition of Eastar Jet is the eighth investment of the VIG Fund IV, following last August’s investment in the golf platform SmartScore.