Eastar Jet faces investigation for false documents

SEOUL– The transport ministry said Thursday it will request for an investigation into Eastar Jet Co. to see if there was any violation in the process of the budget carrier obtaining government approval last year for flight resumptions.

Eastar was in complete capital erosion at the end of 2021, according to its financial statements published in the Financial Supervisory Service’s regulatory filing system on May 13.

The Ministry of Land, Infrastructure and Transport recently found that Eastar submitted false accounting documents to receive air operator certificate (AOC) approval from the ministry on Dec. 15.

It has decided to ask the authorities to investigate if the low-cost carrier “intentionally” hid its capital erosion status for the AOC approval, the ministry said in a statement.

Eastar has said the documents submitted to the ministry in November were based on financial figures that had been available as of the end of May 2020.

But Eastar found unexpected losses in its 2021 financial statements when the accounting system was recovered in February this year following the system’s monthslong suspension due to cost issues, the company said in a statement.

“We will explain what brought the differences in the annual financial figures to the ministry and cooperate in the investigation,” Eastar said in a statement.

Eastar graduated from the court-led debt-rescheduling program in March, one year after it was placed under court receivership amid the COVID-19 pandemic.

Eastar applied for court receivership in January 2021 as it had failed to find a strategic investor since July 2020, when Jeju Air Co., the country’s biggest low-cost carrier, scrapped its plan to acquire Eastar amid the pandemic.

In November, local property developer Sung Jung Co. acquired an entire stake in Eastar through a rights issue following the budget carrier’s overall stock cancellation worth 48.5 billion won (US$40 million).

Eastar has suspended most of its flights on domestic and international routes since March 2020, and its AOC became ineffective in May.

Source: Yonhap News Agency

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