Transport Minister meets HDC, Aekyung Group, Eastar Jet execs to urge M&A deal

Transport Minister Kim Hyun-mi met with executives of HDC Group, Aekyung Group and Eastar Jet on Friday to urge their air carrier merger deals, according to the Ministry of Land, Infrastructure and Transport. 

Kim reportedly had discussions with HDC Group Chairman Chung Mong-kyu, Aekyung Group Vice Chairman Chae Hyung-seok and former Eastar Jet Group Chairman Lee Sang-jik and was briefed on the status of the respective merger deals.

HDC Group, which owns midsized builder HDC Hyundai Development Company, inked a deal with Kumho Industrial in December last year to acquire a controlling 31 percent stake in the country’s second-largest air carrier Asiana Airlines. But the deal’s close has been postponed due to the economic downturn following the outbreak of COVID-19. 

HDC released a statement Friday that renegotiations for acquisition contract terms are underway. 

Aekyung Group, which runs the country’s largest budget carrier by sales, Jeju Air, has been pushing ahead with the takeover of low-cost carrier Eastar Jet since March. 

But the acquisition process hit a setback recently after Jeju Air asked Eastar Jet to settle all of its debts worth some 100 billion won ($83 million) by July 15 to proceed with the deal. 

The Transport Ministry said that the minister has urged the companies to proceed with their planned deals for the development of the aviation industry and stabilization of employment.

If they come up with a clearer attitude for acquisition, the government will fully support the merger process by working closely with related authorities, Kim was quoted as saying. 

The Transport Ministry has been working with authorities like the Ministry of Economy and Finance and the Financial Services Commission to offer benefits to the groups, such as financing support and special employment support when clinching M&A deals. 

Meanwhile, Eastar Jet’s unionized workers staged a protest in front of Aekyung Group’s headquarters in Seoul on Friday, condemning Jeju Air’s parent company for “driving Eastar Jet into bankruptcy.” 

“Jeju Air’s demand that Eastar Jet clear all of its debts created after March by mid-July is nothing but daylight robbery, although it is already written in the contract that the M&A deal has nothing to do with the responsibility followed by COVID-19,” the pilots’ union at Eastar Jet said in a statement.

Unionized workers have been asking Eastar Holdings and the ownership family to pay 24 billion won to 1,700 employees in unpaid wages caused by COVID-19.

But after Jeju Air sent a letter to Eastar Jet on Wednesday to demand debt payments and warned that the merger deal would no longer be valid if Easter Jet failed to do so, the unionized workers changed their target and have been asking Jeju Air to take responsibility. 

By Kim Da-sol (ddd@heraldcorp.com)