Eastar to fly again soon, internationally in the second half

Industry

Published: 14 Mar. 2023, 18:59 Updated: 14 Mar. 2023, 19:38

Eastar to fly again soon, internationally in the second half

Cho Joong-seok, CEO of Eastar Jet, explains the budget carrier's resumption plan during a press conference held at Courtyard Seoul Botanic Park hotel in Gangseo District, western Seoul, on Tuesday. [YONHAP]

Eastar Jet, a low-cost carrier grounded for three years, will resume operations soon and fly internationally in the second half.

The company released a five-year business plan through 2027, including details on its fleet, routes, recruitment and safety, during a press conference in Seoul on Tuesday.

The budget carrier suspended all of its flights in March 2020 due travelers shunning Japan and the Covid-19 pandemic and had been in the state of total capital impairment.

Local property developer Sung Jung emerged as a white knight to acquire the financially troubled company, but the resumption of its flights was repeatedly postponed as the founder and independent lawmaker Lee Sang-jik was embroiled in an embezzlement and breach-of-trust scandal.

In January this year, VIG Partners, a private equity firm, took over Eastar Jet and regained its air operator’s certificate (AOC) last month.

Under the new plan revealed Tuesday, Eastar Jet will seek further expansion abroad in the second-half through leasing more aircraft.

Eastar Jet plans to expand the number of planes to up to ten by the end of 2023. It currently owns three B737-800s.

Four will be Boeing 737-8s, set to be introduced in the second half. The 737-8s maximum flying distance is 6,570 kilometers, the distance between Incheon and Singapore, and is about 1,140 kilometers longer than that of 737-800s. It can reduce fuel use by more than 15 percent, and can provide flexibility across Eastar Jet’s network, the company explained.

“The introduction of aircraft has been preemptively carried out during VIG Partners’ acquisition of Eastar Jet,” said Eastar Jet CEO Cho Joong-seok. “Following the investment of operating funds and the reissue of the AOC, leasing companies have been in active negotiation.”

Eastar Jet is set to resume flights from March 26, starting with the flight on the Seoul Gimpo-Jeju domestic trunk route. It will resume commercial flight operations focusing on routes to Jeju for the first-half — which is expected to contribute to the stabilization the high ticket prices, a company official said.

After introducing the first 737-8, international operations will follow starting with the route connecting Seoul Gimpo and Taipei Songsan. It will later review adding flights heading to Narita, Osaka and Fukuoka, as well as to Southeast Asian countries, such as Vietnam and Thailand.

In addition to acquiring new aircraft, the company said it will hire some 200 new staff this year.

Regarding the financial situation, Eastar Jet explained that it is no longer in capital impairment after VIG Partners invested 110 billion won into the carrier following its acquisition. Eastar Jet plans to invest an additional 20 billion won in its equipment and facilities to strengthen safety.

“Our financial structure visibly improved through the acquisition of VIG Partners,” Cho said.

Eastar Jet set a financial goal to achieve 146 billion won in sales this year, looking to make a turnaround in 2024. It aims to achieve 800 billion won in sales in 2027.

“The three-year suspension is our biggest competitiveness,” the CEO said. “We are fully aware of what will happen to a company if the major shareholder or the management misoperate the company, and I believe such failure will be turned into passion.”

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]