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Staff and creditors owed €500m face big losses to save CityJet

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Rescue: The court approved the plan from the examiner, Kieran Wallace of KPMG

Rescue: The court approved the plan from the examiner, Kieran Wallace of KPMG

Rescue: The court approved the plan from the examiner, Kieran Wallace of KPMG

A High Court judge intends to approve a survival scheme allowing regional airline CityJet once certain steps are taken.

The approved scheme will allow the Dublin-based airline continue as a going concern, on what was described as a "slimmed down" basis, with 140 jobs at the company being retained.

The scheme, which was supported by a majority of the airline's creditors and shareholders, also sees tens of millions of euro of its debt being written off.

Last April, the airline sought the protection of the courts claiming it was insolvent due to financial difficulties which were exacerbated after its aircraft were grounded due to the Covid-19 crisis.

The impact of the pandemic also interrupted a planned merger with another airline and a proposed private restructure of the company, CityJet claimed.

The airline said it had debts of €500m, and at the time of entering the examinership process had a net deficit of liabilities over assets on a going concern basis of €186m.

Its creditors include the Triangle Group, several firms involved in the leasing of aircraft, Investec, the Revenue Commissioners, as well as debts owed to related companies.

Mr Justice Michael Quinn said yesterday he was satisfied to approve a scheme of arrangement put together by the airline's examiner, Kieran Wallace of KPMG.

The judge said that creditors would do better under the examiner's proposals compared to if the airline was liquidated. He said the required number of creditors and shareholders supported the examiner's proposals.

The judge said he was minded to formally approve the scheme after certain steps - including the finalising of arrangements made with certain creditors and the implementation of changes to the airline's constitution - take place.

He adjourned the matter to a date in mid-August.

CityJet no longer flies scheduled routes itself, and operates a model known in the aviation industry known as 'wet leasing' where it provides serviced aircraft and crews to operate routes for other carriers.

Seeking the scheme's approval James Doherty SC for the examiner said his client had stress tested the company and was satisfied that it would be thanks to a €3.9m investment from a related company CityJet Holdings Ltd, funded by a third party Triangle Holdings LP, return to profitability.

Eight out of the 14 classes of creditors supported the survival scheme, five opposed it and one class of creditor abstained.

The majority of the creditors will get what were described as small dividends.

Prior to the Covid-19 outbreak, over 410 people were employed by the airline in Dublin. That number has been reduced to 160.

Over 600 others were employed at European-based subsidiaries. That workforce now numbers just over 200.

Irish Independent