News / Jeju Air looks to grow cargo business after flying back into the black

Photo@ Jeju Air

Low-cost carrier Jeju Air, one of the reported suitors for Asiana Airlines’ cargo business, has expressed ambitions to expand its freight operations after achieving its best financial result.

The airline achieved a net profit of nearly $101m in 2023, reversing 2022’s $138m loss, as it carried more passengers from South Korea to neighbouring countries and Guam, riding on the post-Covid “revenge travel” wave.

Jeju Air said while cargo accounted for just 2% of its revenue, it saw potential from e-commerce growth.

Taking over Asiana’s cargo business would therefore enable acquisitive growth for Jeju Air, which was established in 2005, as a joint venture between cosmetics and healthcare conglomerate Aekyung and Jeju Island’s local government.

It has two 737 freighters and also carries belly cargo on passenger flights. Routes are typically from Incheon to Japan, China and South-east Asian destinations in Malaysia, Indonesia, Thailand, Vietnam and Laos.

A Jeju Air representative told The Loadstar: “Our cargo business is still in its infancy, but demand is growing in the e-commerce markets of China and Vietnam, and in the Japanese pharmaceutical market. We will continue to focus on diversification and work towards acquisition of cargo transport rights and launching new routes.”

Asiana’s cargo unit, which operates nine 747-400Fs and one 767F, according to CH Aviation, is valued at between $382m and $535m, but the new owner will have to take on its debt of more than $760m.

Korean Air Lines, at the government’s behest, is trying to take over debt-ridden Asiana, which has to sell its cargo business to secure deal approval from antitrust authorities which, in several jurisdictions have given the go-ahead, with only the EC and US pending.

Jeju Air had $254m of equity as of 31 December, meaning it could need to take on substantial debt to acquire Asiana’s cargo unit, leading to speculation in the South Korean media that the carrier could turn to Aekyung Group or rope-in an external investor.