South Korean low-cost carrier Jeju Air is acquiring a 51% stake in compatriot Eastar Jet for W69.5 billion ($59.6 million).

Jeju says the carriers have signed a memorandum of understanding and foresee sealing a contract by year-end.

Jeju Air Boeing 737-800

Source: Jeju Air

Korean low-cost carrier Jeju Air operates a fleet of Boeing 737-800

To fund acquisition of the 4.9 million Eastar shares, Jeju is issuing a W10 billion convertible bond which offers nearly 1.5% of its share capital at maturity. The issue has a five-year tenor and bears a 1% coupon.

Cirium fleets data shows that Jeju has 45 Boeing 737-800s in service. The airline has 40 737 Max jets on order.

Eastar’s in-service fleet comprises 20 737-800s and one 737-900ER. It has two 737 Max jets in storage and four on order.

Cirium schedules data shows that both LCCs serve the Northeast Asian and Southeast Asian regions. Eastar’s network spans around 75 destinations, most of which overlap with Jeju’s nearly 150 routes.

The South Korean LCC sector has flourished with government support but has become increasingly crowded and appears to be on the verge of consolidation.

Besides Jeju and Eastar, Cirium data shows there are four other South Korean LCCs with international passenger operations. These are T’way Air, the Korean Air-affiliated Jin Air, as well as the Asiana-affiliated Air Busan and Air Seoul.

This list does not include Aero KAir Premia and Fly Gangwon, which have been awarded business licences this year.