Aekyung prepares Jeju Air’s stock listing

By Lee Hyo-sik

Aekyung Group has been injecting nearly $100 million into Jeju Air over the past few years, making it the country’s largest budget carrier. To recoup its investments, the mid-tier conglomerate specializing in chemical, household goods and retail businesses plans to list the low-cost airline on the local bourse in 2014.

The group is seeking to raise funds to finance Jeju Air’s growing operation and lower its 82-percent ownership to invest more in other business units.

Aekyung officials said Sunday that the lower-cost carrier will likely go public in 2014, adding the group wants to dispose of part of its stake to foreign airlines as a strategic investment.

``We promised our investors that we will list Jeju Air on the local stock market,’’ an Aekyung Group official said. ``The carrier posted operating income last year and is expected to do the same this year and in 2013. It will then meet a crucial listing requirement, three consecutive years of surplus, in 2014.’’

The official said Aekyung’s stake is too high, adding the group wants to reduce its ownership by listing Jeju Air. ``So, we will focus more on other affiliates.’’

The carrier was in the black last year for the first time since its foundation in 2005. It recorded an operating income of 13.9 billion won and a net profit of 16.8 billion won in 2011, on the back of the soaring numbers of passengers.

In the first six months of this year, it earned an operating income of 600 million won and a net profit of 2 billion won.

Jeju Air and other low-cost airlines have been enjoying a surge in the number of Korean and non-Korean passengers flying with them on both domestic and international routes over the past few years.

They now handle over 50 percent of domestic route passengers here and have expanded their reach overseas by launching flights linking Korea with destinations in Japan, China and Southeast Asia, providing both inbound and outbound travelers with more choices.

According to the Korea Tourism Organization, the number of foreign visitors jumped 23.3 percent to 5.33 million in the first half of this year from the previous year.

Jeju Air now operates 13 international routes connecting Incheon International Airport and Gimpo International Airport with cities in Japan and other Asian nations. It also serves three domestic routes linking Jeju Island with Gimpo, Cheongju and Busan.

The carrier is scheduled to launch the Incheon-Guam route on Sept. 27 and the Incheon-Sebu route in November, which it says will further boost its bottom line.

Aekyung Group has been extending financial and other support to turn Jeju Air into Korea’s leading low-cost carrier.

The group has raised the capital of Jeju Air to 110 billion won to enable it to borrow money from banks and other financial services firms.