Han River Ferry Service Faces Financial Crisis with 16.1 Billion Won in Losses

Seoul's ambitious Han River ferry project, championed by Mayor Oh Se-hoon, is facing significant headwinds, with the operating company accumulating a staggering 16.1 billion won in losses and becoming fully capital-impaired. This stark financial reality, revealed in the company's audit report, raises serious questions about the project's viability.

Han River Ferry Co., a joint venture established just over a year ago with 10 billion won in capital, has struggled since its inception. The ferry service, which only began full operations in March 2024 after initial disruptions, has been plagued by technical issues, including frequent breakdowns and a grounding incident. These operational challenges have directly contributed to the substantial financial losses.

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As of the end of the current period, net assets are in a state of capital erosion, and current liabilities exceed current assets by 70 billion won. This signifies the existence of a material uncertainty that raises substantial doubt about the company's ability to continue as a going concern, and therefore, it is necessary to improve the financial structure through stable operating profit in the future.

The audit report highlights a critical situation, noting that the company's net assets are in a state of capital erosion and its current liabilities exceed its current assets by 70 billion won. This presents a 'material uncertainty' regarding the company's ability to continue as a going concern, underscoring the urgent need for financial restructuring and improved operational performance.

Despite these dire financial indicators, Seoul Housing & Communities Corporation, a major stakeholder, remains optimistic, projecting profitability by 2029. This optimism hinges on anticipated improvements in future profitability. However, for residents and observers in Seoul, the immediate concern is the sustainability of a flagship project that, despite its potential to enhance the city's livability, is currently mired in financial distress.

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Han River Ferry recorded operating losses until last year due to initial investment and a short operating period, but we expect to turn a profit in 2029 through future profitability improvements.