Likely investors are interested in backing troubled airline Cityjet, the High Court heard on Monday, as it extended the carrier’s protection from creditors given earlier this month.
Mr Justice Michael Quinn confirmed the appointment of examiners, Kieran Wallace and Andrew O’Leary of specialist firm Interpath Advisory to oversee a rescue of the carrier, which owes creditors €13 million.
The court heard that several investors have expressed interest in the Dublin-based business, which provides aircraft and crew to fly routes under contract for airlines SAS and Lufthansa, since the examiners’ interim appointment on May 8th.
Examinership is a court-supervised rescue process for troubled companies. It bars creditors from enforcing debts for up to 100 days to allow court-appointed examiners to devise a rescue plan for the business.
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Potential backers could include existing shareholder, Air Investment Valencia, the holding company controlled by businessman Carlos Bertomeu, that ultimately controls 80 per cent of Cityjet.
Confirming the examiners’ appointment, Mr Justice Quinn noted that Cityjet had short term liabilities of €13.2 million, but just €7.7 million in cash available.
He pointed that an independent experts’ report accompanying the initial appointment of Mr Wallace and Mr O’Leary stated that the company had a reasonable prospect of survival, if it met certain conditions.
They included cutting costs, focusing on the contract with SAS, restructuring some debt and attracting new investment.
“Those conditions are in the process of being achieved and are capable of being achieved during the examinership process,” he said.
The judge noted that Cityjet had gone through examinership twice previously, but argued that this should be “no bar” to Monday’s reappointment, given the changed market conditions and current challenges that it faced.
Cityjet employs 124 people in the Republic and UK and 461 in Scandinavia through a subsidiary in Denmark.
Along with the trading debt, it has a €32 million liability related to the return of leased aircraft.
The airline does not fly its own scheduled services but provides crewed planes which fly routes on its customers’ behalf, a practice known in the industry as “wet leasing”.
However, Lufthansa is ending its contract with the Irish carrier in October, following a change in strategy decided on by the German airline’s board in January.
SAS only emerged from its own Chapter 11 bankruptcy, a rescue scheme overseen by United States courts, after two years in 2024.
The High Court heard that SAS, Europe’s largest user of wet-leasing services, was committed to its deal with Cityjet.
Mr Justice Quinn said that this pledge provided a “reasonable degree of comfort”.
The judge also pointed out that the expert’s report showed that “restructuring would be more advantageous than liquidation”.
Winding up the company could leave creditors with a total shortfall of €177 million, according to the report.
Mr Justice Quinn noted that the joint examiners did not disagree with the independent expert’s view that the company had a reasonable prospect of survival.
He added that it was appropriate to take this into account. The judge acknowledged that appointing joint examiners was unusual, but not unprecedented, and was appropriate given the company’s scale.
Cityjet provided a cash flow statement showing that it can meet €7.7 million in “critical” costs needed to keep the company in business over the course of the examinership.
They include payments to aircraft lessors, maintenance, staff and other charges. No creditors objected to the petition to confirm the examiners’ appointment on Monday.
The issue is due back in court on Thursday June 5th.
