LCCs in an Unprecedented Crisis
Government-run banks and commercial banks will provide seven low-cost carriers (LCCs) with unsecured loans worth approximately 400 billion won with the LCCs’ business conditions deteriorating amid the spread of COVID-19.
The Ministry of Land, Infrastructure, and Transport is planning to make an official announcement on the loans this week. Korea Development Bank, the Export-Import Bank of Korea and commercial banks are expected to provide a syndicated loan of up to 200 billion won for Jeju Air’s acquisition of Eastar Jet.
The government-run banks are currently having talks with commercial banks. The tentative amount of the loan has been fixed in view of the contract value of 54.5 billion won and the fund required for Eastar Jet’s paid-in capital increase.
Korea Development Bank previously decided to provide the LCCs with up to 300 billion won for business stabilization. The bank is expected to provide 100 billion won or so for the syndicated loan. Then, 200 billion won will be provided for Jin Air, Air Seoul, Air Busan, T’way Air and Fly Gangwon.
In that case, the total financial support for the LCCs will be 400 billion won, divided into Korea Development Banks’ 100 billion won syndicated loan, 200 billion won for the other LCCs, and 100 billion won from the Export-Import Bank of Korea and commercial banks.