Jeju Air is facing liquidity concerns following a surge in cancellations after the Muan Airport disaster.
The burden of cash outflow is expected to increase further due to refunds on advance payments and the impact of a boycott.
On January 2nd, according to the Financial Supervisory Service’s electronic disclosure system, Jeju Air’s advance payments amounted to 260.6 billion won (approximately 28 billion yen), the largest among domestic low-cost carriers.
This figure is 41.6% higher than the second-largest, T’way Air, and mainly includes ticket fees received in advance during flight reservations.
In the immediate aftermath of the disaster, from December 29th to 1 PM on December 30th, approximately 68,000 ticket cancellations were recorded.
Most of these cancellations occurred after 9 AM on the 29th, the time of the accident.
Jeju Air announced full refunds and waived cancellation fees for all flights booked before December 29th, in addition to fully reimbursing passengers affected by the disaster.
Unlike the usual practice of imposing cancellation fees or offering vouchers as alternatives, Jeju Air is expected to bear the significant financial strain of refunding all cancellations in cash.
Industry experts have noted that “the spread of boycotts by some consumers could further expand the scale of refunds," adding that “a direct cash outflow will likely reduce the liquidity ratio and slow the cash flow from operating activities."
Jeju Air’s financial health is already a point of concern.
As of the end of Q3, the company’s liquidity ratio stood at 39.4%, well below the optimal level of 150%.
While its operating cash flow for Q3 showed a net inflow of 93.9 billion won , this marked a 68.9% decline compared to the 301.6 billion wonrecorded during the same period last year.
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