Korean Jeju Air to buy 51% stake in Eastar Jet for $59 million

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South Korean budget airline Jeju Air signed a preliminary deal to buy a 51% stake in unlisted low-cost carrier Eastar Jet for $58.93 million, Jeju Air and its parent AK Holdings said.

The carrier’s losses had risen as demand for travel to Japan fell and as its two Boeing 737 MAX jets were grounded.

The deal shows consolidation is underway in South Korea’s crowded budget carrier space as travel demand is falling to the key Japan market due to a diplomatic row between Japan and South Korea, hitting profitability of airlines.

Eastar Jet currently operates 34 routes with 23 aircraft, including the two grounded Boeing 737 MAX 8.

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