Fly Gangwon applies for court receivership

A Fly Gangwon plane arrives at Yangyang International Airport in Gangwon. [YONHAP]

Fly Gangwon, a low-cost carrier based in Yangyang, Gangwon, will suspend all flights from Saturday and apply for court receivership amid financial difficulties.

According to the Gangwon Provincial Government on Friday, Fly Gangwon will suspend its entire flight operations from Saturday and is scheduled to file for court receivership next Monday.

The company, which was founded in 2016, submitted an application to the Seoul Regional Office of Aviation for the suspension of flight operations on Thursday afternoon, except for the Yangyang-Jeju route, which will remain operational until Friday.

Since its inaugural flight in 2019, Fly Gangwon has faced significant challenges due to the Covid-19 outbreak.

The airline has a debt of 46 billion won ($34.62 million), with outstanding wage payments amounting to approximately 5.2 billion won.

In an attempt to address its financial difficulties, Fly Gangwon had been in negotiations with a private equity fund for a 100 billion won investment since April, but the deal fell through.

The province of Gangwon, which had taken on the role of supporting Fly Gangwon, now finds itself in a difficult position.

In response to Fly Gangwon's planned filing for court receivership, the Gangwon Provincial Government issued a statement on Thursday, urging the company and major shareholders to come up with a more stringent restructuring plan.

"Despite challenging financial conditions, the province has already funded 14.5 billion won in financial assistance to Fly Gangwon," it said in a statement, adding, "Yangyang County recently provided additional support of 2 billion won despite their difficult financial conditions.

"The province of Gangwon is prepared to provide active support, provided that Fly Gangwon and its major shareholders demonstrate a responsible approach and present practical and attainable recovery measures," it added.

The provincial government also outlined its plans to establish a collaborative system with the Ministry of Land, Infrastructure and Transport and the Airport Corporation, aiming to minimize the impact on passengers and prioritize mitigating passenger losses.

Fly Gangwon informed its customers through its website that purchased tickets would be fully refunded without any fees, and reserved passengers would be eligible for compensation of up to 100,000 won per one-way trip.

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