SEOUL, South Korea >> When Jeju Air’s status as South Korea’s biggest low-cost carrier seemed under threat from the merger of the country’s two biggest airlines last year, the company’s CEO assured employees that it would “actively respond,” possibly by acquiring smaller rivals.

Now, a week after a crash that killed 179 people on Dec. 29, Jeju Air’s future is clouded by even deeper questions.

South Korean officials on Thursday raided the company’s offices and imposed a travel ban on Kim E-bae, the CEO, as part of the investigation into the country’s worst air disaster in almost three decades. Passengers are canceling bookings, adding further strain to a balance sheet heavy with debt. And Jeju Air’s stock price, already trading near record lows, has fallen 10% since the disaster.

Earlier in the week, Kim said Jeju Air would cut 15% of its flights until March to “enhance operational stability.”

As investigators look into what caused Jeju Air Flight 7C2216 to crash, the airline has come under intense government and public scrutiny for how it operates. Some of its operational practices are being challenged, including how it flew its planes more frequently than competitors and how it outsourced its maintenance overseas.

At a news conference at Muan International Airport on the day of the crash, Kim said maintenance checks had found no problems with the plane, which he said had no history of accidents. In a public statement, Jeju Air said it was “committed” to helping anyone affected by the crash and was “fully cooperating” with investigations into its cause. It did not immediately respond to a phone call seeking comment.

Jeju Air’s business outlook was already uncertain. Over the past two years, like other airlines, the company has grappled with increased costs because of inflation and higher interest rates. The capacity of Jeju Air’s flights had not fully returned to prepandemic levels, according to OAG, a global air travel data provider. The carrier operated 4% fewer flights in 2024 than in 2019.

The crash came after the completion of Korean Air’s acquisition of a majority stake in Asiana Airlines last month. The merger — a $1.05 billion deal agreed upon four years ago — will eventually create a single national carrier. As part of that deal, three budget carriers operated by the two companies will be brought under one brand that will surpass Jeju Air as South Korea’s largest low-cost offering.

Two decades ago, Jeju Air became the country’s first upstart budget airline with the aim of challenging the duopoly of Korean Air and Asiana. Jeju Air would fly the busy tourist route between Seoul and Jeju, a scenic island off the southern coast of South Korea. The airline is majority-owned by AK Holdings, a conglomerate best known for selling laundry detergent and toothpaste.