The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Sung-soo Eun, “Korea Eximbank”) announced on July 23 that it would provide funds of USD 70 million to Jeju Air to help purchase two Boeing B737-800 planes.
Jeju Air is the largest low-cost carrier (“LCC”) in Korea, currently operating 34 passenger planes on operating leases, which means the lessor gives the right of using the assets to the lessee in return for regular payments for an agreed period of time.
With Jeju Air’s purchase of aircraft for the first time among local LCCs, other LCCs based in Korea are also likely to follow suit by placing orders directly with an aircraft manufacturer as the revised IFRS16, which recognizes operational lease as debt, is going to take effect from next year.
Korea Eximbank offered more favorable terms than other foreign banks, considering that LCCs are part of the new growth industries of Korea that the Bank has been aiming to foster and their contribution to increasing employment.
A Korea Eximbank official remarked, “This is our first support for LCC, and the operation of one additional plane can create at least 50 jobs.” He added, “As Jeju Air is expanding new flight routes including Southeast Asian countries and Japan, it will be able to contribute to economic vitalization and earning foreign currencies by attracting more foreign tourists to Korea.”
Korea Eximbank is continuously expanding its financial support for businesses in medicine, ICT, cultural contents industries, etc., as well as LCCs in order to foster the new growth industries in Korea.