Jeju Air, the leading low-cost carrier in South Korea, has reportedly secured a combined ?320 billion ($232 million) for its latest fleet modernization project.
The airline claimed to have raised the funds through the sale of 273 million new common shares on August 26. The firm's facility budget will be increased owing to this paid-in capital rise.
The largest shareholder of Jeju Air, AK Holdings, issued exchangeable bonds worth ?130 billion ($94.3 million) to participate in the paid-in capital increase.
Reportedly, the stakeholder had only intended to issue EBs for ?100 billion ($72.5 million). But it increased the scale when 26 more institutional investors agreed to take part.
The stakeholder ascribed this additional investment to the aviation sector's promising market prospects. According to the Ministry of Transport data, there were 1.35 million international passengers flying on flag carrier flights in August, a 708% growth from January 2022.
As per Jeju Air's own figures, it carried 37 times more passengers over the course of the same two months.
According to credible sources, the airline will increase its facilities budget to add 40 more Boeing B737-8 aircraft to its fleet starting in 2023.
Boeing's latest model, the B737-8, has a maximum range of 2,993 kilometers as well as a cruise speed of 836 kilometers per hour.
These new aircraft by Jeju Air can cover 1,000 more kilometers and uses over 15% less fuel than Jeju Air's existing B737-800 aircraft. Additionally, it can lower the cost of a flight by 12% per ticket.
With the new aircraft's increased range, Jeju Air plans to launch additional long-haul flights to Indonesia and Central Asia.
According to a Jeju Air official, compared to earlier plans, the paid-in capital growth plan is different in tone. Unlike past expansions done to address financial challenges, the plan acts as a foundation to boost business competitiveness since it is an investment to grow capital to consolidate the firm's position as a top airline in the post-COVID-19 time.
Source credit: https://www.koreaherald.com/view.php?ud=20220912000113&np=1&mp=1