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Korean budget carriers repay debt on strong earnings

Collected: 2024.03.13

Distributed: 2024.03.14

Source: Go Direct

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[Courtesy of Jin Air Co.]

South Korean low-cost carriers (LCCs) are rushing to clear off debt incurred to keep their businesses afloat during the pandemic.

According to sources from the aviation industry on Tuesday, Jin Air Co. has decided to pay off the principal of the exchangeable bonds worth 15.8 billion won ($12 million) issued three years ago.

The settlement date is in April.

Exchangeable bonds, or EBs, are a type of hybrid security consisting of a straight bond and an embedded option to exchange the bond for the stock of a company other than the issuer at some future date and under prescribed conditions.

The price at the EBs has been set at 23,050 won per share. Although the bonds were set to mature this year, Jin Air decided to repay the principal, realizing that the exchange into shares could incur losses, as its stock price has been hanging around 10,000 won per share in recent days.

Unlike three years ago, its financial health has improved to support the repayment, backed by record-breaking sales and operating profit last year, the company said.

Jeju Air Co. has also settled 65 billion won of the relief loans from the state-owned Korea Development Bank and government funds.

By Cho Yun-hee and Han Yubin

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