[비즈한국] Jeju Air089590, a low-cost carrier (LCC) under the Aekyung Group, shifted to a deficit last year. This is interpreted as the result of the Muan International Airport incident in December 2024 and the large-scale introduction of new aircraft. While the company breathed a sigh of relief by posting an operating profit in the fourth quarter of last year, the outlook remains far from positive, as the introduction of new aircraft has strained its finances and competition in the LCC industry is intensifying.
Annual Deficit, But Q4 Return to Profit Shows 'Signs of Recovery'
Jeju Air announced its 2025 performance on the 9th. The company’s revenue fell 18.38% from 1.9358 trillion won in 2024 to 1.5799 trillion won in 2025. While Jeju Air recorded an operating profit of 79.9 billion won in 2024, it shifted to an operating loss of 110.9 billion won in 2025. The company also recorded a net loss of 143.6 billion won last year.
Jeju Air had recorded profits and rising revenue in 2023–2024, following the post-COVID-19 endemic phase. The company's poor performance last year is attributed to the Muan International Airport incident that occurred in December 2024. After the accident, Jeju Air reduced its route supply for a period to enhance flight safety. The number of flights operated by Jeju Air decreased by 6.57%, from 80,656 in 2024 to 75,360 in 2025. Total passenger numbers also fell by 8.34%, from 13.34 million to 12.23 million.
Jeju Air's investments also contributed to the shift to a deficit. Last year, the company purchased six Boeing B737-8 aircraft. Jeju Air had previously purchased two B737-8s in 2023 and recently acquired another one. The list price of a B737-8 is known to be around 120 million USD (approximately 173.7 billion won). Although the actual purchase price is likely lower when various options are applied, it is still a fact that huge sums of money are required to purchase aircraft.
A hopeful sign for Jeju Air is that it posted an operating profit of 18.6 billion won in the fourth quarter of last year alone. After recording deficits for four consecutive quarters from Q4 2024 to Q3 2025, it succeeded in returning to a quarterly profit in Q4 of last year. Analysts believe that the increase in travel to Japan due to the relatively lower exchange rate burden, despite the high exchange rate, and the permit for visa-free entry for Chinese tour groups had a positive impact on Jeju Air.
Growing Financial Burden, Improving Liquidity is Key
Although Jeju Air succeeded in improving its performance in the fourth quarter of last year, the future cannot be viewed with pure optimism. Jeju Air's financial burden grew as it introduced new aircraft last year. The company’s total liabilities increased by 23.97% from 1.6744 trillion won at the end of 2024 to 2.0758 trillion won at the end of 2025, and its debt-to-equity ratio rose by 320.48 percentage points (p) from 516.68% at the end of 2024 to 837.16% at the end of 2025. Increased debt leads to higher interest expenses.
Ahn Do-hyun, a researcher at Hana Securities, analyzed Jeju Air: "While the return to profit in Q4 is welcome news, the recovery of ASK (Available Seat Kilometers) is still slow, so it is difficult to expect higher topline (revenue) in 2026 compared to 2024." He added, "The fact that there was a deficit of 70.9 billion won as of the end of 2025 and the debt-to-equity ratio has risen to over 900% is also burdensome." ASK is the product of the number of seats supplied and the flight distance.
Ahn continued, "Jeju Air is replacing its fleet with B737-8 financial leases, which is expected to lower transportation costs in the long term, but there are concerns about cash shortages in the short term. As outbound growth for domestic LCCs has stagnated and intensified competition is expected to continue for a while, a cautious approach to Jeju Air is still necessary."
Perhaps for this reason, Jeju Air appears to be focusing on improving liquidity. Jeju Air plans to sell its entire 100% stake in AKIS to AK Holdings006840 this coming April. The sale price is 43.29 billion won. Jeju Air disclosed that the purpose of the stake sale is to "improve financial structure through securing liquidity." It is also reported that Jeju Air is considering selling three of its existing aircraft following the introduction of the new ones.
Intensifying competition in the LCC industry is also a source of anxiety. When competition intensifies, it is difficult to significantly raise fares. Moon Ah-young, a senior researcher at NICE Credit Rating, predicted, "Given each airline's fleet introduction plans and the re-launch of Parata Airlines, a downward trend in short-haul route fares is expected to continue." She added, "Cost burdens due to the weak won, increased fleet introductions, and inflation are expected to remain at a higher level than before the COVID-19 pandemic. LCCs with weak fare defense capabilities and lower cost efficiency are expected to show poor profitability."
A Jeju Air official stated, "We are centering this year's management strategy on internal stability to respond to the increasingly uncertain business environment, such as the volatility of oil prices and exchange rates, and the restructuring and intensifying competition in the aviation market. We will focus on improving performance by enhancing the stability and efficiency of business operations to build a sustainable profit structure."