Air Premia, currently facing capital erosion, has initiated the rights offering process. The company aims to stabilize its deteriorating financial structure through this funding effort.
According to the airline industry on September 8, Air Premia will conduct a rights offering worth 110 billion won for shareholders on the 18th. The payment date is set for the 29th, with the actual amount of funds raised expected to become clear by the end of this month or early next month.
This rights offering is critical for improving Air Premia's financial structure. Previously, in September 2024, the Ministry of Land, Infrastructure and Transport ordered the company to enhance its financial stability.
In response, Air Premia decided in July to pursue a rights offering to strengthen its financial structure and business foundation. The company plans to issue 550 million new common shares to existing shareholders, aiming to raise 110 billion won.
Air Premia's financial situation has been worsening. As of the end of last year, its capital was 146.8 billion won, but total equity fell to negative 47.1 billion won, resulting in complete capital erosion. The capital erosion rate increased to 131.8%, up 50.4 percentage points from 81.4% in 2024.
Despite recording its highest revenue of 593.6 billion won last year, Air Premia reported an operating loss of 32.1 billion won, primarily due to increased aircraft acquisition and maintenance costs.
To improve its financial structure, Air Premia conducted a capital reduction in April, which included changing the par value and consolidating shares, reducing its capital from 146.8 billion won to 16.3 billion won. The company now plans to bolster its capital through this rights offering.
The success of the rights offering is crucial. Since it is being conducted on a preferential basis for existing shareholders, the amount of funds Air Premia can secure will depend on how much of the allocated shares existing shareholders are willing to purchase.
Industry insiders believe that Air Premia needs to secure at least 50 billion won to resolve its capital erosion issues. However, there is uncertainty about the success of the rights offering given the current downturn in the low-cost airline market.
One industry official stated, "Given the downturn in the low-cost airline sector, it is difficult to guarantee the success of the rights offering. Securing more than half of the target amount is essential to find a path to normalization."
* This article has been translated by AI.
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