Recently, Aekyung Group, the parent company of Jeju Air, has fallen into the deepest crisis since its establishment due to the crash of a Jeju Air passenger plane at Muan Airport. The disaster has tarnished the brand image of Jeju Air, making it difficult to avoid a decline in performance. In this situation, Aekyung Group appointed Ko Jun as a director of AK Holdings on the 7th. Industry interpretations suggest that he has been entrusted with the role of 'relief pitcher' for re-acquiring the AK Plaza Bundang branch and addressing the Jeju Air disaster.
AK Holdings, the holding company of Aekyung Group, held its 55th extraordinary general meeting of shareholders at 9 a.m. in the Araum Hall on the 7th floor of Aekyung Tower in Mapo-gu, Seoul. This is the first shareholders' meeting held after the Muan incident involving Jeju Air. The main agenda items included the appointment of Ko Jun as a director and the appointment of Shin Young-jae as a commissioner for the Audit Committee. The items were approved swiftly within 20 minutes of the start of the meeting.
As a result of this shareholders' meeting, Ko will join the board of directors of AK Holdings. This comes about a month after he was appointed CEO of AK Holdings on December 1, 2024. Ko is expected to lead the company with Aekyung Group Vice Chairman Chae Hyung-seok under a dual management system. He is noted as a 'strategist' who has led the group through changes. He is expected to push for the re-acquisition of the AK Plaza Bundang branch, a task that Aekyung Group is currently facing, and to address the aftermath of the Jeju Air passenger plane crash.
Ko, who has served as CEO of AK Plaza from 2022 until last year, strengthened the local commercial district and product planning and composition (MD) through a so-called 'local-friendly shopping center (NSC)' strategy. Notable examples include the K-Pop and animation-centered kidult (kids + adult) content MD at the Hongdae branch and family-centered content MD at the Giheung branch. An AK Holdings representative noted, 'He was the person who revived the offline retail business, which had stagnated due to the COVID-19 pandemic, during his tenure as CEO of AK Plaza,' adding, 'We will push for the re-acquisition of the AK Plaza Bundang branch to enhance core business competitiveness.'
Ko is reportedly working tirelessly to address the aftermath of the Jeju Air crash, which occurred less than a month after his inauguration. On the day of the incident, December 29, 2024, Ko visited the site with about 250 Jeju Air employees, including Chae, the overall vice chairman, and Kim Yi-bae, the CEO of Jeju Air, bowing his head in respect while directing support for the funeral of the bereaved families.
However, following a year-end event by one of Aekyung Group’s affiliates during the national mourning period, and amid ongoing criticism that the recent Jeju Air disaster stemmed from poor maintenance conditions and aircraft defects, restoring their brand image has become a challenging task. On social media, there are calls to boycott products from Aekyung Industrial, a subsidiary of Aekyung Group, with lists of brands being shared. Thus, reviving the fallen brand image has become another challenge that Ko must tackle.
◇AK Holdings holds 50% equity in Jeju Air… Attention on resolving liquidity crisis
AK Holdings, the holding company of Aekyung Group, is the largest shareholder of Jeju Air, holding 50.4% equity. Jeju Air is a low-cost airline (LCC) established in cooperation between Aekyung Group and Jeju Special Self-Governing Province in 2005. During the COVID-19 pandemic, AK Holdings invested 614.8 billion won in Jeju Air, which had not been able to escape deficits for four years. Additionally, they borrowed over 250 billion won in the form of stock-backed loans and exchange bonds, using Jeju Air shares as collateral. If the drop in Jeju Air’s stock price continues, it is expected that they will face financial risks due to a decrease in collateral value.
In this situation, rumors of a liquidity crisis at Jeju Air have emerged. The disaster has triggered mass ticket refunds, leading to a significant drop in advance payments, a key indicator of cash flow for the airline. Advance payments are amounts paid in advance by ticket purchasers. They are recorded as a liability until the tickets are used, at which point they are converted to revenue.
According to the Financial Supervisory Service’s electronic disclosure system, Jeju Air's advance payments totaled 260.8 billion won as of the third quarter of last year. During the same period, Jeju Air's liquidity ratio was 39.4%, and cash flow from operating activities was 93.9 billion won. The cash flow from operating activities has already decreased by 68.9% compared to the same period in 2023 (301.6 billion won). When reflecting the large refund amounts, the financial health of Jeju Air is expected to worsen, including the decrease in advance payments.
This is not solely an issue for Jeju Air. The situation of other affiliates of Aekyung Group is also unfavorable. AK Holdings has subsidiaries including Aekyung Industrial (45.1%), Aekyung Chemical (60.3%), and AK Plaza (60.2%). Aekyung Industrial recorded an operating profit of 43.5 billion won in the first to third quarters of this year, a decrease of 13.52% compared to the same period last year. During the same period, Aekyung Chemical’s operating profit also dropped to 17.7 billion won, down 51.8% from the previous year. Since 2020, AK Plaza has been in a state of deficit.
An industry insider noted, 'Coinciding with Ko's appointment as CEO of AK Holdings, unexpected crises and challenges have surfaced all at once,' adding, 'Ko has been tasked with revitalizing the fallen brand image and ensuring that core business competitiveness is not compromised.' Another insider remarked, 'In a situation that has even led to a boycott movement for Aekyung Group products, Ko's role has become even more crucial.'