This article was published on Aug. 14, 2025, at 4:34 p.m. on the ChosunBiz MoneyMove site.
Some low-cost carriers (LCCs) are being mentioned as potential sale candidates in the domestic mergers and acquisitions (M&A) market. While an actual sale has not yet materialized, as there has been no official announcement of a public sale or bidding process, consulting firms are reportedly preparing proposals in anticipation of a potential sale.
However, contrary to the expectations of the sellers, analyses suggest that the explosive increase in passenger demand following COVID-19 is showing signs of slowing down, diminishing the attractiveness of acquisitions. Since this is not a restructuring measure through corporate rehabilitation or workouts, both strategic investors (SIs) and private equity funds (PEFs) are showing a conservative stance toward airline acquisitions due to limited upside compared to their investments.
According to investment banking (IB) industry sources on the 14th, low-cost carriers such as Air Premia and Eastar Jet are being considered for sale. Air Premia is in a situation where the likelihood of selling its management rights has increased due to the imprisonment of Kim Jeong-kyu, the chairman of Tire Bank. Eastar Jet is reportedly informally gauging interest from potential buyers, having decided to sell by its largest shareholder, VIG Partners.
The industry also classifies Jeju Air as a potential candidate for sale. If the ongoing Aekyung Industrial transaction does not meet the Aekyung Group's expectations, it is anticipated that Jeju Air, where most of its equity is tied up in collateralized loans, may be put on the market. AK Holdings is currently in a situation where it has provided approximately 41.68 million shares (96.4%) of its 43.236 million shares in Jeju Air as collateral for loans due to financial difficulties.
The issue is that there aren't many entities in Korea that can acquire a low-cost airline. Analysts note that, given the massive infusion of funds to survive during the COVID pandemic, they are taking a cautious approach to airline acquisitions.
A private equity industry source noted, "Funds have been watching as both large and low-cost airlines struggled despite receiving hundreds of billions of won in funding during the pandemic, and if another infection outbreak arises, causing a sharp decline in travel demand, funds will have to abandon their portfolios."
Prior to this, domestic airlines facing severe liquidity crises during the COVID pandemic had conducted large-scale capital increases to secure funding. In 2020, Korean Air received 1.2 trillion won in support from the Korea Development Bank and Export-Import Bank along with a capital increase of 1 trillion won.
Jeju Air, Jin Air, and AIR BUSAN have conducted equity increases ranging from hundreds of millions to billions of won. Eastar Jet entered legal management, and T'way Air ultimately changed ownership to Daemyung Sono Group.
Another factor decreasing acquisition attractiveness is that key domestic low-cost airlines are caught in a price war, which has plunged them into losses. As the increase in demand for overseas travel has stagnated, customers continue to shift to full-service carriers (FSCs). The competition to lower fares to fill empty seats is intense, and the entry of new operators into an already saturated market has raised concerns about prolonged sluggishness.
The difficulty of the deals is also high. The airline industry has a high-cost structure, and profitability fluctuates significantly due to exchange rate and oil price movements.
An industry source explained, "In order to stay ahead in competition, substantial ongoing investments are required for aircraft acquisitions, but with limited upside, the attractiveness is diminished. While some mid-sized company owners have a demand for prestige in airports and onboard services, there are many who evaluate that there are not enough entities with the financial capacity to acquire the current candidates under discussion."