Jeju Air has finally abandoned the acquisition of Easta Air.

The merger and acquisition (M&A) of the two companies, which have been noted for the first company-to-airline company combination, will be disrupted, leading to a disruption in the aviation industry, as well as concerns about the breakthrough of Istar Airways and mass unemployment of 1,600 employees.

Jeju Air today announced that it has canceled the stock trading agreement (SPA) to acquire the management rights of Eastar Airlines.

In the disclosure, Jeju Air said, "We have canceled the open stock trading contract due to the unconfirmed violation of the guarantee of the statement and the closing date of the transaction."

It has been 7 months since the Memorandum of Understanding (MOU) was signed for the SPA on December 18 of last year, and 4 months after the SPA was signed on the 2nd of March.

After the announcement, Jeju Air said, "The government has determined that the uncertainty that Jeju Air should bear is too great to carry out the acquisition in the current situation despite the government's willingness to support and arbitration efforts. It is also true that there is great concern about the damages of stakeholders including shareholders." "I'm sorry that this M&A hasn't paid off," he said.

The two companies have faced a serious liquidity crisis in the aftermath of Corona19 and have been in conflict over the implementation of the prerequisites in the contract.

Unpaid wages of Easta Airlines have accumulated over 170 billion won, including overdue wages of 25 billion won.

During this process, Istar Air's shutdown and responsibility for non-paid wages opened up, causing conflicts.

In addition to Lee Sang-jik, the founder of Easta Air, suspicions arose, including suspicion of stock purchase funding around a Democratic Party member, and Lee said he would dedicate all of the family's stakes held by Easta Holdings through Easta Holdings, but did not change the flow of acquisitions.

Eventually, Jeju Air sent'last ultimatum' to ISTA Air on the 1st of this month stating "If you do not fulfill all of the prerequisites within 10 business days, you can cancel the contract." IN) Until midnight on the 15th, ESTA Holdings was unable to complete the prerequisites for the stock trading agreement, so it was possible to cancel the contract."

At the time, Jeju Air postponed the closing closing (end) of the deal, saying, "We decided to set the final decision and notification time for the contract cancellation by considering the government's mediation efforts in progress." ) It was interpreted that only the declaration was left.

As Jeju Air abandoned the acquisition, East Star Air, which Lee Sang-jik established as the head office in Gunsan, Jeonbuk in October 2007, was in danger of closing in 13 years.

A pile of unemployment with over 1,600 employees of Istar Airways is also expected to become a reality.

Easta Air's total capital in the first quarter of this year was -142 billion won, and it has already been fully eroded and cannot be recovered by itself.

Even after entering the court administration, it is expected that corporate rehabilitation will be difficult, and more than 1,600 employees of Easta Airways, who have not been paid well since February, will be settled on the streets.

Since the two sides have already mixed opinions on the implementation of the prerequisites, it is expected that both parties will continue the litigation before taking responsibility for destroying the contract.