Eastar Jet, Jeju Air face court battles after takeover rupture

Eastar Jet and Jeju Air are preparing to file lawsuits against each other after the latter scrapped its plan to acquire the former amid the prolonged COVID-19 pandemic, industry officials said Monday. In March, Jeju Air signed a deal with Eastar Holdings, the holding company of Eastar Jet, to acquire a controlling 51.17% stake in the low-cost carrier for 54.5b won ($47m). But Jeju Air abandoned its acquisition of the cash-strapped carrier, July 23, due mainly to growing uncertainties in the aviation industry caused by the pandemic. Eastar Jet is working to file a damage suit against Jeju Air, claiming its financial difficulties had worsened since March when Jeju Air "asked it to shut down all of its flights" as part of measures to proceed with the takeover deal. Eastar Jet said this has led to unpaid wages for its employees that total tens of billions of won. Eastar Jet's debts, estimated at about 170b won including the company's delayed payments for fuel and the use of airport facilities as well as the unpaid wages, are some of the thorny issues that hampered negotiations between Eastar Holdings and Jeju Air. "Jeju Air's order to stop our flights was the direct cause of the unpaid wages for our employees," Eastar Jet CEO Choi Jong-gu said. "We might not have been driven into a corner if Jeju Air had not issued such an order." Eastar Holdings has already filed a lawsuit against Jeju Air, demanding fulfillment of a stock purchase contract.<br/>