CityJet (WX, Dublin International) has entered into examinership, a legal process in Ireland akin to US Chapter 11 bankruptcy protection which grants insolvent firms protection from creditors, after a Dublin court appointed Kieran Wallace of KPMG as interim examiner.
In a letter to staff seen by ch-aviation, Chief Executive Patrick Byrne said that for the duration of proceedings, the Irish ACMI/charter specialist will continue under its current management.
"In our application to the High Court in Dublin..., CityJet outlined how it has been engaged in dialogue with its stakeholders relating to a restructuring of its business following difficult trading results over the past two years and in preparation for the planned merger with Air Nostrum (YW, Valencia Manises). Unfortunately, the impact of COVID-19 on the airline sector has had a devastating effect on revenues," Byrne wrote.
He added that he "firmly believed the airline could sustain itself through this standstill period of operations and will emerge as a stronger company". Byrne promised that CityJet would continue to grow after the pandemic.
The interim examiner will thoroughly review the current state of the airline before informing the court of its prospects of survival. Byrne underlined that the process, unique under EU law, is meant to allow the company to achieve long-term sustainability through restructuring rather than dissolution.
The High Court confirmed that despite its current insolvency, CityJet had "a reasonable prospect of survival" and, if creditors accept concessions, it will continue trading as a going concern.
According to court documents seen by Irish broadcaster RTE, CityJet has debts of EUR500 million (USD544 million) and a current net deficit of liabilities over assets on a going concern basis of EUR186 million (USD202.4 million). Creditors include the Triangle Group, lessors, Investec Bank, the Revenue Commissioners, as well as debts owed to related companies.
According to the ch-aviation fleets module, CityJet operates five ARJ-85s and twenty-eight CRJ900s. The equivalent of two BAe Systems quadjets are wet-leased to Aer Lingus (EI, Dublin International) under a long-term deal and fly the Dublin International-London City route. Five Bombardier Aerospace regional jets were wet-leased to Brussels Airlines (SN, Brussels National), which recently terminated the contract due to the projected long-lasting drop in demand caused by the pandemic. The remaining twenty-three CRJ900s are wet-leased to SAS Scandinavian Airlines (SK, Copenhagen Kastrup). Neither Aer Lingus nor SAS has formally cancelled the wet-lease so far, although all aircraft operated by CityJet are now grounded. CityJet also partially owns Air Antwerp (Antwerp), which operates a single Fokker 50 between Antwerp and London City but, as a result of the COVID-19 lockdown, is currently inactive.
Justice Garrett Simons said he was satisfied from evidence submitted by an independent expert that the airline has a reasonable prospect of survival if certain steps are taken. As such, Wallace has 100 days, or until July 28, to put together a scheme of arrangement with the company's creditors which, if approved by the High Court, will allow the firm to continue to trade as a going concern. To that end, CityJet also said that SAS has agreed to support it during its current hiatus and that there had been positive engagements with its creditors. Cost-cutting measures have also been instituted in the hopes of saving "millions of euro".
