Eastar Jet may become grounded as govt questions accounting files for permit renewal

[Photo by MK DB]

Korean budget carrier Eastar Jet readying for takeoff upon refueling under new ownership could become grounded as the government embarked on an audit on fraudulent accounting report.

According to the land, infrastructure, and transport ministry Tuesday, it has confirmed falsified accounting in the files Eastar Jet submitted for renewal of license to add long-haul flight after the bankruptcy court approved of the sale and reorganization scheme in November 2021.

The airliner received new permit on Dec. 15 by leaving out the fact that its assets were entirely overwhelmed with debt.

It reported 365.4 billion won in capital surplus and 199.3 billion won in deficits. But under the disclosure of audited financial statement on May 13, reserve of 375.1 billion won was entirely overwhelmed by deficit of 485.1 billion won as of December 2021.

Transport minister Won Hee-ryong said the ministry will carry thorough investigation and audit on violation of rules in the process of Eastar filling for new flight permit. ¡°We will take strict actions based on the finding.¡±

The issue of air operator certificate will be delayed. The airliner could lose international flight permit if any wrongdoing is found.

Eastar Jet was sent to the bankruptcy court amid liquidity crisis after the pandemic outbreak.

It was acquired by local property developer Sung Jung Co. in November. The property developer invested 108.7 billion won ($83.62 million) to purchase of rights issue following the debt-laden airliner¡¯s stock cancellation.

Eastar said the documents submitted to the ministry were based on financial numbers as of May 2020. The carrier found unexpected losses in its financial statements for 2021 after its accounting system was normalized upon graduation from court receivership.

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