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| T'way Air CEO Jeong Hong-geun, center, speaks during a press conference at the Plaza Hotel in Seoul, Thursday. Jeong said the budget carrier will benchmark Air Asia, the world's largest low-cost carrier, by setting up subsidiaries in Japan, China and Vietnam. / Courtesy of T'way Air |
By Lee Hyo-sik
T'way Air will benchmark Air Asia, the world's largest low-cost carrier (LCC), by setting up subsidiaries in Japan, China, Vietnam and other Asian countries to become a global carrier, the company chief said Thursday.
CEO Jeong Hong-geun also told reporters that Korea's leading budget carrier, which serves passengers heading to destinations in Asia, will operate large-size planes such as Boeing 777s and Airbus 330s to fly to the United States and Europe from 2020.
The carrier currently has a fleet of 20 Boeing 737-800 planes on 39 international routes, linking Korea with cities in eight countries.
The company also plans to list itself on the bourse in the second half of 2018 to raise capital to improve its financial health and finance its expanding operations.
"T'way is not what it used to be back in the early 2010s," Jeong said. "We had a hard time when we first entered the LCC market. But thanks to our dedicated employees, we began making money from 2013. We expect to achieve a record performance this year."
He said the sales will reach 550 billion won ($482 million) in 2017, up from 383 billion won the previous year. Its operating profit is projected to climb to 50 billion won from 12.6 billion won in 2016.
"However, the domestic LCC market is increasingly moving toward a saturation point. Besides the six budget carriers, several more are seeking to enter the market," the CEO said. "With Korea's shrinking population and other unfavorable conditions, we have reached a conclusion that we cannot survive by solely depending on the local market."
To achieve sustainable growth, T'way will establish subsidiaries in Japan, China and Vietnam by following in the footsteps of Air Asia, Jeong said.
Headquartered in Malaysia, Air Asia has set up units in Thailand, Indonesia and other Southeast Asian countries, becoming the world's largest budget carrier.
"We would like to have T'way Japan or T'way Vietnam in the near future. Founding an extensive presence outside Korea is a must for our future," he said.
To emerge as a global carrier, T'way also plans to lease large airplanes, most likely Boeing 777s, to launch long-haul flights linking Korea with destinations in the U.S. and Europe.
"We plan to lease at least 10 full-size planes by 2025 to fly to Los Angeles, Frankfurt, Honolulu and other cities," the CEO said. "We do not intend to compete with Korean Air or Asiana Airlines. We believe that there is also demand for LCCs in the long-distance aviation market. We would like to serve that need."
To bolster its corporate image and improve its financial soundness, T'way plans to list its shares on the local bourse in the latter half of the next year.
"Our debt-to-equity ratio is about 700 percent but when we raise capital through initial public offering, the ratio will go down significantly. We would also like to secure funds to finance our growing operations," Jeong said.
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