Material event report (merger)

What happened

Material Event Report (Merger Decision) 6.2 Air Busan Co., Ltd.

Material Event Report / Matters Subject to KRX Reporting Obligation To the Financial Services Commission / Korea Exchange August 21, 2026

Company name: Air Busan Co., Ltd. Representative Director: Jeong Byeong-seop Head office address: 6 Yutongdanji 1-ro 57beongil, Gangseo-gu, Busan (Phone) 1666-3060 (Website) http://www.airbusan.com Preparer: (Title) Head of Strategic Planning (Name) Seo Seong-jin (Phone) 051-410-0860

Merger Decision

1. Merger method: Jin Air Co., Ltd. absorbs Air Busan Co., Ltd. and Air Seoul Co., Ltd., Surviving company: Jin Air Co., Ltd.; Dissolved companies: Air Busan Co., Ltd., Air Seoul Co., Ltd. (Surviving company's name after merger: Jin Air Co., Ltd.), Merger type: Not applicable

2. Purpose of merger: The merging companies seek synergies from integrating management resources, strengthening business competitiveness, and raising management efficiency, and, through improved corporate governance, aim to maximize shareholder value through the surviving company's continued growth.

3. Material effects and implications of the merger 1) Effect on management: Jin Air, Air Busan, and Air Seoul are affiliates of the Hanjin business group under the Monopoly Regulation and Fair Trade Act. Air Busan and Air Seoul shareholders will receive newly issued Jin Air shares according to the merger ratio, based on shares held as of the record date for allotment of merger shares. Jin Air will survive and will succeed to all rights, obligations, and status of Air Busan and Air Seoul. As of the filing date, Jin Air's largest shareholder is Korean Air Co., Ltd. (54.91%); Air Busan's largest shareholder is Asiana Airlines Co., Ltd. (58.40%); and Air Seoul's largest shareholder is Asiana Airlines Co., Ltd. (100%). Separately, Korean Air's absorption merger of Asiana Airlines is in progress; once completed, Asiana Airlines's Air Busan and Air Seoul shares will transfer comprehensively to Korean Air. Also, to resolve a potential violation of the holding-company conduct restrictions under the Fair Trade Act applicable to Hanjin Kal, the group's holding company, Korean Air is considering acquiring all of Asiana Airlines's Air Busan shares before this merger (see item 17 below). After this merger, Korean Air's stake in surviving company Jin Air is expected to change to 58.14% (assuming completion of the Korean Air-Asiana Airlines merger), with no change in the largest shareholder. Air Busan and Air Seoul will be absorbed into Jin Air and dissolved. 2) Effect on finances: Through this merger and post-merger integration (PMI), the merging companies expect to realize fixed-cost reductions and economies of scale by consolidating aircraft maintenance, passenger transport, and in-flight-service infrastructure, and to reduce duplicate administrative costs by integrating overlapping domestic and overseas airport offices and IT infrastructure. Consolidated management of cash and non-cash assets currently spread across the three companies is expected to improve treasury efficiency, and optimized fleet operation centered on short/medium-haul aircraft together with the return of older, high-cost aircraft is expected to support optimized aircraft investment and improved cost competitiveness (financial leverage). 3) Effect on operations: In April 2026, the merging companies obtained MOLIT approval of changes to operating standards (A502) for the LCC integration transition plan, securing a lawful and stable regulatory basis for the integration. The merger is expected to strengthen the merging companies' core competitiveness by combining the three LCCs' route networks and operating capacity in response to a rapidly changing global aviation market and entrenched high-cost structures, and to strengthen mid- to long-term business competitiveness through expanded passenger network capacity. It is expected to eliminate inefficiencies on overlapping routes and improve flight frequency, slot times, and price competitiveness on core short-haul international routes (Japan, Southeast Asia, China) and domestic routes; Jin Air also plans to expand Seoul/Busan route networks and "shuttle-ize" key routes to significantly broaden consumers' scheduling options. Integrating IT infrastructure and airport operations previously run separately by the three companies is expected to realize economies of scale as an integrated LCC, improving core cost structures (aircraft acquisition, fuel, and operating/maintenance costs) and driving competitiveness and profitability at the surviving company. 4) Effect on shareholder value: As of the record date for allotment of merger shares (the business day immediately preceding the merger date), Air Busan common shareholders will receive 0.2862684 Jin Air common shares per share held, and Air Seoul common shareholders will receive 0.7501939 Jin Air common shares per share held; no merger shares will be allotted for treasury shares held by Air Busan or shares that become treasury shares of Air Busan or Air Seoul through dissenting shareholders' exercise of appraisal rights. The surviving company expects both growth and improved profitability from the merger synergies described above, and anticipates that the combined scale and competitiveness will be better reflected in Jin Air's market value; post-merger, it also expects faster decision-making, greater management efficiency, economies of scale in procurement/finance, complementary effects across profitability/growth/stability, and consolidated resources for future investment, ultimately supporting shareholder returns and shareholder value.

4. Merger ratio: Jin Air Co., Ltd. : Air Busan Co., Ltd. = 1 : 0.2862684; Jin Air Co., Ltd. : Air Seoul Co., Ltd. = 1 : 0.7501939

5. Basis for calculating the merger ratio: Jin Air and Air Busan, both KOSPI-listed, had their merger values calculated under Article 165-4 of the Financial Investment Services and Capital Markets Act ("Capital Markets Act") and Article 176-5, Paragraph 1, Items 1 and 2(a) of its Enforcement Decree. Air Seoul, an unlisted company, had its merger value set, per Article 165-4 of the Capital Markets Act and Article 176-5, Paragraph 1, Item 2(b) of its Enforcement Decree, as the weighted average of asset value and earnings value as determined by an external valuation institution. a. Jin Air common-share merger value: calculated as the arithmetic mean of the 1-month volume-weighted average closing price, 1-week volume-weighted average closing price, and most recent closing price, as of the base date (the business day before the earlier of the board resolution date and merger agreement date, both 2026-08-21, i.e., 2026-08-20), with no premium or discount applied. 1-month weighted average close (2026-07-21~2026-08-20): KRW 5,179; 1-week weighted average close (2026-08-14~2026-08-20): KRW 5,149; most recent close (2026-08-20): KRW 5,140. Jin Air merger value: KRW 5,156. b. Air Busan common-share merger value: calculated the same way. 1-month weighted average close: KRW 1,498; 1-week weighted average close: KRW 1,467; most recent close: KRW 1,462. Air Busan merger value: KRW 1,476. c. Air Seoul common-share merger value: as an unlisted company, calculated under Article 176-5, Paragraph 1, Item 2(b) of the Enforcement Decree, Article 5-13 of the Regulation on Issuance and Disclosure of Securities, and Article 4 of its Enforcement Rules, as the weighted average of asset value and earnings value in a 1:1.5 ratio ("intrinsic value"); relative value was reviewed for comparison but not calculated because fewer than three comparable companies existed. Intrinsic value [(A×1 + B×1.5)/2.5]: KRW 3,868 (A. Asset value: KRW 6,415; B. Earnings value: KRW 2,169). Relative value: not applicable. Air Seoul merger value: KRW 3,868. (See the attached external appraiser's opinion for details.) Accordingly, the merger ratios were set at Jin Air:Air Busan = 1:0.2862684 and Jin Air:Air Seoul = 1:0.7501939. Corporate value: surviving company KRW 269,143,200,000; dissolved companies (combined) KRW 259,560,601,072 (Air Busan KRW 240,462,351,072 + Air Seoul KRW 19,098,250,000).

6. External valuation Whether obtained: Yes Basis and reason: Because the Jin Air-Air Seoul merger involves a listed company merging with an unlisted company to remain listed, an external valuation of the appropriateness of the merger value was obtained under Article 165-4, Paragraph 2 of the Capital Markets Act and Article 176-5, Paragraph 8, Item 2(b) of its Enforcement Decree. External valuation institution: Samil PricewaterhouseCoopers External valuation period: 2026.04.13 ~ 2026.08.20 External valuation opinion: Samil PwC reviewed the appropriateness of the merger ratio among Jin Air, Air Busan, and Air Seoul for use as an attachment to the companies' required filings under the Capital Markets Act, and concluded that, with per-share values of Jin Air KRW 5,156 (par value KRW 1,000), Air Busan KRW 1,476 (par value KRW 1,000), and Air Seoul KRW 3,868 (par value KRW 5,000), the agreed merger ratios of 1:0.2862684 and 1:0.7501939 are appropriate and were not found to have been calculated in violation of the merger-value methods set out in Article 176-5 of the Enforcement Decree of the Capital Markets Act and Articles 5-13 through 5-13-2 and Articles 4~8 of the Enforcement Rules of the Regulation on Issuance and Disclosure of Securities, from a materiality standpoint.

7. Type and number of merger shares to be issued (shares): Common shares 50,324,853 (Air Busan shareholders: 46,620,771; Air Seoul shareholders: 3,704,082); Special class shares: none

8. Counterparty to the merger Company name: Jin Air Co., Ltd. (for Air Seoul's details, see item 18 below) Main business: Air passenger transport Relationship with the Company: Affiliate Financial details for the most recent fiscal year (KRW): Total assets 1,174,174,394,774; Capital 52,200,000,000; Total liabilities 949,738,426,789; Sales 1,381,080,693,148; Total equity 224,435,967,985; Net loss -9,755,171,166 External audit: Anjin Accounting Corporation; Audit opinion: Unqualified

9. Newly established merged company: Not applicable

10. Merger schedule: Merger agreement date 2026-08-21; Record date for determining shareholders 2026-11-10; Period for receipt of notices of dissent to the merger: 2026-11-20 to 2026-12-06; Scheduled shareholders' meeting date 2026-12-07; Appraisal-right exercise period: 2026-12-07 to 2026-12-28; Creditor objection period: 2026-12-07 to 2027-01-08; Trading suspension period: 2027-03-12 to 2027-03-30; Merger date 2027-03-16; Completion-report general meeting date 2027-03-17; Scheduled merger registration date 2027-03-17; Scheduled new-share listing date 2027-03-31.

11. Whether this constitutes a backdoor listing: No 12. Whether the other company meets backdoor listing requirements: Not applicable

13. Matters concerning appraisal rights Exercise requirements: Under Article 522-3 of the Commercial Act and Article 165-5 of the Capital Markets Act, a shareholder of record as of the record date who notified the Company in writing of dissent before the shareholders' meeting resolution may, within 20 days after that resolution, request in writing that the Company purchase all or part of the shares held, subject to the holding-period and acquisition-timing conditions in Article 165-5, Paragraph 1 of the Capital Markets Act and Article 176-7, Paragraph 2 of its Enforcement Decree. The companies must purchase the requested shares within one month after the appraisal-request period ends. The expected purchase price, KRW 1,495, was calculated under Article 176-7, Paragraph 3, Item 1 of the Enforcement Decree as the arithmetic mean of the volume-weighted average prices for the most recent 2 months, 1 month, and 1 week from the base date. Exercise procedure/method/period/place (condensed): Written notice of dissent must be given before the shareholders' meeting (through the relevant securities company for beneficial shareholders); the appraisal request, with class and number of shares, must be submitted within 20 days of the resolution. Request period: 2026-11-20 to 2026-12-06 (notice of dissent); shareholders' meeting 2026-12-07; appraisal exercise period 2026-12-07 to 2026-12-28. Reception places: Jin Air (surviving company), registered shareholders at its Gangseo-gu, Seoul head office, beneficial shareholders through their securities company; Air Busan (dissolved company), registered shareholders at its Gangseo-gu, Busan head office, beneficial shareholders through their securities company; Air Seoul (dissolved company), 446 Jeil Terminal-daero, Yeongjong-gu, Incheon. Expected payment timing/method: Payment on 2027-01-27 by transfer to the shareholder's registered account (or, for beneficial shareholders, to their account at the relevant securities company). Restrictions on appraisal rights: Shares sold and reacquired during the relevant period lose appraisal eligibility; once exercised, a request cannot be withdrawn; a shareholder who voted for the merger at the shareholders' meeting after giving prior written notice of dissent may not exercise appraisal rights. Effect on the contract: If the aggregate appraisal purchase price across all merging companies (based on each company's expected purchase price as stated in its material event report) exceeds KRW 200,000,000,000 as of the end of the appraisal exercise period, Jin Air, Air Busan, and/or Air Seoul may terminate the merger agreement by written notice to the other parties.

14. Board resolution date (decision date): August 21, 2026 Independent (outside) director* attendance: Present 2, Absent - Auditor attendance: Present

15. Whether a put option or other contract has been concluded: No 16. Whether subject to securities registration statement filing: No Reason exempted: Jin Air, the surviving company, will file the merger securities registration statement. * Applies to independent directors for listed companies, and outside directors for unlisted companies.

17. Future plans for corporate restructuring: The Hanjin group, to which the merging companies belong, is currently merging Korean Air and Asiana Airlines. Once that merger completes, Asiana Airlines's Air Busan shares (58.40% of common shares) and Air Seoul shares (100%) will transfer comprehensively to Korean Air; regardless of whether that merger completes, Korean Air will remain Jin Air's largest shareholder after this LCC merger, with no change expected. In parallel, the Hanjin group plans to review and pursue further restructuring of affiliates in ground-handling, IT, and other support businesses to eliminate duplicate operations and create synergies, though no specific method or schedule has been finalized as of the filing date; any company with a disclosure obligation will disclose further developments as its board resolves them. Separately, because Asiana Airlines became a grandchild subsidiary of holding company Hanjin Kal on 2024-12-12, Asiana Airlines and its subsidiaries Air Busan and Air Seoul became subject to the Fair Trade Act's holding-company conduct restrictions, which limit a grandchild subsidiary's ownership of affiliate shares unless it owns their entire issued shares. Asiana Airlines's roughly 58.40% common-share stake in Air Busan does not meet that full-ownership exception. Under Article 18, Paragraphs 4(1) and 5(1) of the Fair Trade Act, a 2-year grace period from the date of becoming a grandchild subsidiary applies, here, from 2024-12-12, when Korean Air acquired 63.88% of Asiana Airlines and became its controlling shareholder, so the restriction must be resolved by 2026-12-11, unless a 2-year extension is approved by the Korea Fair Trade Commission under Article 18, Paragraph 6. Korean Air and Asiana Airlines are reviewing an application for such an extension and, as a contingency, Korean Air's acquisition of Asiana Airlines's Air Busan stake. As of the filing date, no specific implementation method has been finalized; any decision will follow consultation with the Fair Trade Commission, external valuation, tax/accounting review, and required approvals, and will be disclosed under relevant laws and regulations when finalized.

18. Other matters material to investment decisions a. Breakdown of "7. Type and number of merger shares": Air Busan common shares 46,620,771; Air Seoul common shares 3,704,082; total common shares 50,324,853. b. Additional information on "8. Counterparty to the merger", Air Seoul Co., Ltd.: Main business Air passenger transport; Relationship Affiliate; Financial details (KRW): Total assets 302,301,944,076; Capital 24,687,500,000; Total liabilities 270,627,064,579; Sales 289,775,485,394; Total equity 31,674,879,497; Net loss -7,774,715,946; External auditor Samjong Accounting Corporation; Audit opinion Unqualified. c. Under Articles 522 and 434 of the Commercial Act, merger approval requires a special resolution, at least two-thirds of voting rights present and at least one-third of total issued shares, at the shareholders' meeting of each dissolved company, failing which the merger may fail. d. Other than cash paid for fractional shares, no merger consideration or other cash will be paid to shareholders of the dissolved companies. e. The number in "7." above may change based on the results of appraisal-right exercises and the treatment of fractional shares. f. The financial details in "8." are based on the 2025 year-end financial statements of Jin Air and Air Seoul. g. The schedule in "10." is an expected schedule as of the filing date and may change based on required permits, approvals, and consultations with relevant authorities. h. The completion-report general meeting in "10." will be replaced by a board resolution and public notice under Article 526, Paragraph 3 of the Commercial Act; the board resolution is scheduled for 2027-03-17. i. Details on the expected appraisal purchase price in "13.": Under Article 165-5, Paragraph 3 of the Capital Markets Act, the purchase price is to be set by agreement between the shareholder and the Company; absent agreement, the price is set under Article 176-7, Paragraph 3 of the Enforcement Decree based on market trading prices before the board resolution date, and either party may petition a court to determine the price if it disagrees. Air Busan's offered price for negotiation, calculated under Article 176-7, Paragraph 3 of the Enforcement Decree as of the base date 2026-08-20, is KRW 1,495. (1) Calculation of the expected purchase price (base date 2026-08-20): ① Most recent 2-month volume-weighted average price: KRW 1,522 (2026-06-22~2026-08-20); ② Most recent 1-month volume-weighted average price: KRW 1,498 (2026-07-21~2026-08-20); ③ Most recent 1-week volume-weighted average price: KRW 1,467 (2026-08-14~2026-08-20); Base purchase price [(①+②+③)/3]: KRW 1,495. (2) Daily calculation detail (unit: KRW, shares; Date, Close, Volume, Close×Volume): 2026-08-20~1,462~56,630~82,793,060 2026-08-19~1,443~71,481~103,147,083 2026-08-18~1,448~123,993~179,541,864 2026-08-14~1,487~210,123~312,452,901 2026-08-13~1,471~325,576~478,922,296 2026-08-12~1,535~74,787~114,798,045 2026-08-11~1,524~78,371~119,437,404 2026-08-10~1,537~82,494~126,793,278 2026-08-07~1,534~95,599~146,648,866 2026-08-06~1,550~330,471~512,230,050 2026-08-05~1,548~154,081~238,517,388 2026-08-04~1,526~115,380~176,069,880 2026-08-03~1,525~150,555~229,596,375 2026-07-31~1,497~190,348~284,950,956 2026-07-30~1,476~165,049~243,612,324 2026-07-29~1,483~176,141~261,217,103 2026-07-28~1,489~209,276~311,611,964 2026-07-27~1,488~154,111~229,317,168 2026-07-24~1,485~68,406~101,582,910 2026-07-23~1,490~88,834~132,362,660 2026-07-22~1,437~85,447~122,787,339 2026-07-21~1,430~54,740~78,278,200 2026-07-20~1,413~94,331~133,289,703 2026-07-16~1,451~516,402~749,299,302 2026-07-15~1,489~246,056~366,377,384 2026-07-14~1,462~244,732~357,798,184 2026-07-13~1,486~277,267~412,018,762 2026-07-10~1,625~544,650~885,056,250 2026-07-09~1,566~1,781,001~2,789,047,566 2026-07-08~1,466~232,978~341,545,748 2026-07-07~1,514~183,746~278,191,444 2026-07-06~1,529~100,383~153,485,607 2026-07-03~1,555~123,573~192,156,015 2026-07-02~1,575~139,012~218,943,900 2026-07-01~1,569~147,713~231,761,697 2026-06-30~1,542~140,003~215,884,626 2026-06-29~1,587~243,224~385,996,488 2026-06-26~1,498~2,035,124~3,048,615,752 2026-06-25~1,618~226,183~365,964,094 2026-06-24~1,576~173,992~274,211,392 2026-06-23~1,541~201,376~310,320,416 2026-06-22~1,564~129,433~202,433,212 Summary: ① 2-month VWAP 1,522; ② 1-month VWAP 1,498; ③ 1-week VWAP 1,467; base purchase price 1,495. Source: KRX Data System (data.krx.co.kr). The appraisal-right exercise deadline for Air Busan shareholders is 2026-12-28, subject to change if that date is not a business day. j. Fractional shares below one full share from the merger allotment will be paid in cash based on the closing price on the listing date of the merger shares, with Jin Air acquiring the corresponding fractional shares as treasury shares under Article 341-2, Item 3 of the Commercial Act. k. No merger shares will be allotted for Air Busan's treasury shares or for shares that become treasury shares of Air Busan or Air Seoul through dissenting shareholders' appraisal-right exercises. l. Jin Air, the surviving company, is currently and will remain a KOSPI-listed company after the merger. m. Approval of the merger agreement by Air Busan's and Air Seoul's shareholders' meetings requires a special resolution (at least two-thirds of voting rights present and at least one-third of total issued shares), failing which the merger may fail. n. Jin Air, as a large company under Article 11 of the Fair Trade Act and Article 18 of its Enforcement Decree, must obtain prior business-combination clearance; the merger cannot complete before that clearance, though it qualifies for simplified review as an affiliate merger. Jin Air will also file a business-combination notification with Vietnam's competition authority immediately after the board resolution approving the merger agreement, and will comply with other countries' requirements as applicable. o. Under Article 22, Paragraph 1 of the Aviation Business Act, Jin Air must obtain MOLIT approval (including acceptance by the relevant regional aviation authority) for this merger before completion; Jin Air will apply immediately after the board resolution and plans to obtain approval before filing the merger securities registration statement, and will amend this report once the approval outcome is confirmed. The merger schedule may change, or the merger may fail, depending on the approval process. p. Contract termination/precondition clauses (condensed): The merger agreement's preconditions (Article 13) include lawful shareholder approval, receipt of required government approvals (including Aviation Business Act approval), accuracy of representations and warranties, performance of covenants, absence of material adverse changes, and absence of prohibitive government orders. Termination grounds (Article 14) include mutual written agreement before the merger date; material adverse changes or unforeseen material defects; termination if aggregate appraisal purchase prices exceed KRW 200,000,000,000 as described above; uncured material breach of representations or covenants after 7 days' written notice; and final refusal of a required government approval. Surviving provisions (including Articles 15, 19, and 20) remain effective after termination. q. The corporate value in "5." above was calculated as the merger value multiplied by total shares issued, under Article 5-13-2 of the Regulation on Issuance and Disclosure of Securities; the dissolved companies' combined corporate value of KRW 259,560,601,072 is the sum of Air Busan's KRW 240,462,351,072 and Air Seoul's KRW 19,098,250,000. r. The scheduled merger registration date of 2027-03-17 in "10." is the scheduled date for filing the merger registration. s. Air Busan fulfilled directors' fiduciary duties under Article 382-3 of the Commercial Act and the Ministry of Justice's fairness-enhancing guidelines for corporate reorganizations, operating its audit committee (2 independent directors and 1 other non-executive director with no special interest in the merger) as a special committee. The special committee received a briefing on the merger on 2026.4.21, retained external advisors, and met three further times (2026.5.18, 2026.7.27, 2026.8.19) with external legal and financial advisors to review the merger structure, terms, procedure, and appropriateness of the merger ratio, including Air Seoul's intrinsic-value assumptions and valuation model, and concluded, after reviewing the expected synergies from the three-LCC integration, that the merger serves the interests of the Company and all shareholders without unfair or discriminatory effect on minority shareholders, reporting this to the board, which approved execution of the merger agreement on that basis. See the attached board minutes and opinion for details. t. This disclosure supersedes and finalizes the Korea Exchange's unconfirmed clarification disclosures dated 2025.12.08 and 2026.06.02 regarding media reports of the Jin Air three-LCC merger.

Related disclosures: Unconfirmed clarification of rumor or media report, 2025.12.08; Unconfirmed clarification of rumor or media report, 2026.06.02. See Jin Air's forthcoming securities registration statement for further details on this merger.

(condensed translation)