Eastar Air Secures 110 Billion KRW Investment... "VIG Partners Become Largest Shareholder"

On the 8th, an Eastar Jet passenger plane is parked at Terminal 2 of Incheon International Airport. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Hyunseok Yoo] Eastar Jet announced on the 6th that it has signed an investment agreement worth 110 billion KRW with the private equity firm VIG Partners. According to this investment agreement, Eastar Jet will secure 110 billion KRW in operating funds through a third-party allotment capital increase by the end of this month.

An Eastar Jet official stated, “With the securing of new operating funds, we will achieve a stable improvement in our financial structure and focus on the issuance process of the Air Operator Certificate (AOC).”

Founded in 2007, Eastar Jet started the 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 was awarded first place in the low-cost carrier category based on the Korea Service Quality Index in 2017. However, the company faced a crisis during the COVID-19 pandemic, including the suspension of its Air Operator Certificate (AOC) and entering rehabilitation procedures. Although the rehabilitation process ended after about a year in March last year, the company remained in a state of capital erosion, making additional capital injection necessary for financial restructuring and business normalization.

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.

Following the 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 aviation industry.

CEO Jo said, “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. 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.”

VIG Partners plans to actively invest in the introduction of new aircraft and route expansion after the deal closes. This acquisition of Eastar Jet is the eighth investment of VIG’s fourth fund, following last August’s investment in the golf platform SmartScore.