As Jeju Air announced today (23rd) that it will be'no-deal' with Instar Air (Musan Takeover), East Air, a low-cost airline based in Jeonbuk, was in danger of closing after 13 years of launch.

It seems that corporate revival will be virtually impossible, and over 1,600 employees of ISTA Air are expected to settle on the streets.

In addition to Lee Sang-jik, Democratic Party member Lee Sang-jik established Gunsan in Jeonbuk as the head office in October 2007.

In a statement released on the 29th of last month, Lee said, "East Star with a passion to break the monopoly of aviation and open a low-cost aviation era for the public despite receiving a finger around the reckless act in 2007 when a large company hungered on the domestic aviation market." Founding the airline, I pour blood, sweat, tears and passion with my employees.”

By 2014, Saemangeum Tourism Development was the largest shareholder with 49.4% stake.

Saemangeum Tourism Development is an affiliate of KIC Group, where Lee was the president.

Until 2012, Lee served as general manager of the ISTA Air Group, but while serving as the 19th member of the National Assembly (2012-2016), he passed the management of ISTA Air to his older brother, Kyung-il Lee, the former chairman of KIC Group.

After failing in the 20th general election, Lee again served as Chairman of the Easta Air Group in 2016-2018, and served as Senior Vice President of the Central Election Countermeasures Headquarters for the Democratic Party's 19th President Moon Jae-in, and Chairman of the Small and Medium Business Venture Promotion Corporation. He entered the National Assembly again.

Among these, East Star Holdings, which was founded in 2015 with a capital of 30 million won, purchased a 68.0% stake in Eastar Airlines several months later and became the largest shareholder.

Eastar Holdings' son (66.7%) and daughter (33.3%) have a 100% stake, and at the time of establishment, his son was in his teens and his daughter was in his 20s.

Daughter Lee Su-ji, CEO of Estar Holdings, served as an outside director and other non-executive director at Istar Air, and then served as the Head of Brand Marketing Division (Vice President), and then resigned from ISTA Air's position as the head of Brand Marketing Division.

In response, controversy over paper company controversy and illegal suspicion of suspicion were raised over the route that secured funds to purchase Esta Air's stock, which is estimated at 10 billion won.

In the aftermath of the Corona 19 crisis this year, the company's management slump worsened as it entered a record-breaking'shutdown'.


According to an external auditor's audit report on financial statements for fiscal 2011 submitted to the Financial Supervisory Service in April 2012, Hallym Accounting Corporation stated, “Ista Air had a net income of 8.4 billion won and 269 billion won in 2010 and 2011 respectively. He made a net loss, and as of the end of the 2011 fiscal year, the total amount of debt exceeded the total amount of assets by KRW 26.2 billion, and the total amount of capital was undermined.

Hallym Accounting Corporation also said that it may not be possible to maintain normal aircraft lease transactions.

As of the end of 2016, submitted in March 2017, Istar Holdings' audit report refused to audit at all because the company did not provide key data necessary for the audit, such as financial statements, cash flow statements, and notes on financial statements.

Although it was the first in Korea to carry out aggressive management by introducing the latest model, the B737 Max aircraft, the B737 Max stopped operating since March of last year due to a series of crash accidents abroad, and has seriously damaged its business.

As the oil price fluctuated due to the spread of Japan's refusal to travel to Japan and the rising exchange rate, the company suffered from management difficulties and eventually entered the emergency management system in September last year.

Easta Air's total capital in the first quarter of this year was -142 billion won, and it has already been fully eroded.


As a result, Easta Airlines, which is unable to recover itself due to the collapse of the acquisition, will likely go through bankruptcy.

Even if you go into court management, you are more likely to be liquidated than corporate rehabilitation.

In this M&A process, there are various suspicions surrounding the family members, and it is unlikely that a third party acquirer is likely to appear as a third-party acquirer when the industry is difficult due to prolonged corona.

As of February, 1,600 employees of Istar Airways, who have not been paid properly, have agreed to return wages in order to complete the takeover, and tried to share the pain, but in the end, mass unemployment could not be avoided.

(Photo = Yonhap News TV, Yonhap News)