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Irish Times
3 days ago
- Business
- Irish Times
Three times unlucky: Cityjet finds itself seeking protection from creditors again
Irish-based airline Cityjet is back under High Court protection from creditors, for the third time in its 33-year history. Mr Justice Michael Quinn confirmed the appointment of Kieran Wallace and Andrew O'Leary of specialist firm Interpath Advisory earlier this week as examiners to the carrier. They have up to 100 days to devise a rescue plan for the business, which has €7.7 million in cash and creditors who are seeking €13 million. An independent report on its finances by Damian Murran of Teneo Restructuring Ireland says its net liabilities were €38.5 million at the end of February. Much of that consists of payments due under aircraft leases, so does not fall due immediately. Mr Murran points out that net liabilities would increase to €66 million as a consequence of examinership, including €18.7 million due to unsecured creditors. However, he states that liquidation would increase the amounts owed to €177 million. READ MORE This is partly because liquidation would trigger big penalties under the airline's contracts with SAS and Lufthansa, adding significantly to the amounts due to its creditors. [ More turbulence at Cityjet as interim examiners called in Opens in new window ] While the company remains under the court's protection, creditors cannot enforce any debts. The 'examinership' process is designed to allow financially troubled companies with a reasonable chance of survival stay in business. Cityjet last went into examinership in April 2020, a month after Covid-19 curbs grounded global air travel. It emerged the following August. The first time it did so was in 1996. Run by chief executive and founder Pat Byrne, who is no longer a shareholder, Cityjet flies regional routes for Scandinavian airline SAS and Germany's Lufthansa. It uses its own aircraft and crews for this, a practice known in the industry as wet leasing. It began focusing solely on this business in 2018, deciding to no longer operate its own scheduled services in a move designed to cash in on opportunities it saw emerge as bigger carriers sought ways to maintain less lucrative regional routes while they concentrated on longer routes. [ Dublin-based CityJet reports loss of €16.8m in 2023 Opens in new window ] Cash flow forecasts in the report show that the company can trade through the 100-day examinership while paying its workers and suppliers critical to keeping the business going. Cityjet's current problems are rooted in the decision of key customer, SAS, to enter Chapter 11 bankruptcy in the United States in July 2022. Not unlike examinership, Chapter 11 is a federal court-supervised process that allows companies facing financial problems restructure their debts and capital so they can stay in business. Airlines based outside the US have used this process in the past. SAS originally expected Chapter 11 to take around nine to 12 months, but it ended up lasting two years. That limited SAS's scope to make longer-term commitments to Cityjet, leaving the Irish group with no certainty on its arrangement with the Scandinavian group beyond October 2023. During that period, SAS also contracted some routes to a Cityjet rival, Estonian carrier Xfly, aggravating the Irish group's problems. Consequently, Cityjet began to focus more on providing services to Lufthansa in 2023. Cityjet, which is based at Dublin Airport, employs more than 580 people in Ireland, Britain, Denmark and Sweden. It is unclear how many jobs would be lost in any restructuring. Photograph: Nick Bradshaw Those routes were seasonal. The cost of laying off crew and mothballing aircraft for the winter, and then returning them to service for the summer, was prohibitive. Instead, Cityjet kept planes and crews in service. That cost it €13 million, according to Mr Murran. Last year, the airline began talks with Lufthansa to establish a long-term commercial relationship, spending cash on boosting its workforce, compliance and maintenance in anticipation of a big contract extension. It even drew up plans to increase its fleet. The pair agreed initial terms late last year. However, in January, Lufthansa told Cityjet that its board had decided on a new strategy. Not only was the German group not going ahead with the extended wet-leasing deal, it said it was terminating its current contract in October. That removes around one-third of Cityjet's business. As this was going on, SAS finally emerged from Chapter 11 in August last year with $1.2 billion in fresh investment. However, the lack of a long-term deal with SAS prompted Export Development Canada (EDC) to sell 14 Bombardier planes, leased to the Irish group, to American Airlines, agreeing short-term lease extensions and a delivery schedule up to April next year for the aircraft. This will cost Cityjet €21.6 million up to that date, stemming from terms in the leases covering engine overhauls. That figure would have been higher but EDC agreed to amend those terms, cutting the liability by €20 million. However, Mr Murran points out that as Cityjet has not paid the Canadian company since February, it risks a breach of contract and a 'reversal' of the deal to cut the liability by €20 million. EDC is listed as a creditor, through CJF Aviation, for €1.9 million. EDC is one of the parties with which Mr Wallace and Mr O'Leary will be negotiating through the examinership. On Monday, the High Court heard it was not objecting to Cityjet's petition for protection from creditors. SAS will also loom large in the process. That group agreed a new four-year deal with Cityjet in October 2024. It is the largest user of wet leasing among European airlines. Lawyers said on Monday that it would continue doing business with Cityjet through the examinership. Any new business plan will focus on flying routes for SAS while potentially expanding the current agreement. There may be some headroom for this as Xfly, the Estonian carrier that took some of the Irish group's routes, has filed for bankruptcy. But Cityjet will be smaller. As things stand, it employs more than 580 people across the Republic, the UK, Denmark and Sweden. According to Mr Murran, 116 of those are based in Ireland, with eight in Luton, and 461 working for its Danish subsidiary, Cityjet AS. [ Investors circle troubled Cityjet Opens in new window ] Some of those jobs will be lost, but nobody knows where or how many at this point. New investment seems certain to play a part in any rescue. The examiners' lawyers told the High Court this week that some – as yet unnamed – potential backers have expressed interest since their interim appointment on May 8th. One possibility is that the larger of its current shareholders, Spanish group Air Investment Valencia, which is controlled by businessman Carlos Bertomeu, could reinvest in Cityjet. Air Investment Valencia owns 80 per cent of Cityjet as it is, through a holding company, Strategic Alliance of Regional Airlines, which owns Cityjet and Spanish carrier, Air Nostrum, along with aircraft maintenance and service companies. From left, Miguel Angel Falcon and Carlos Bertomeu of Air Nostrum, and Cityjet's Pat Byrne and Cathal O'Connell at the announcement in 2023 that the two regional airlines were joining forces Cityjet owes Air Nostrum's maintenance arm €2.3 million, making the Spanish business one of the biggest individual unsecured creditors. Irish company CF Miga owns the remaining 20 per cent. That business is also a secured creditor as Cityjet owes it €400,000 from a €1.9 million loan given in 2020. Creditors are likely to take a hit in any scheme of arrangement, as examiners' rescue plans are known. The law allows examiners a lot of scope to restructure debt. In addition, once the scheme is supported by any single group of creditors that loses out as a consequence, the court can approve it. Mr Justice Quinn acknowledged on Monday that this was the third time that Cityjet had sought the High Court's protection and gone into examinership. However, he argued that this was 'no bar' to the company availing of the process again, as it faced new difficulties and challenges.
Irish Independent
6 days ago
- Business
- Irish Independent
Slieve Russell Hotel made loss prior to last year's sale but outlook is more positive
New accounts for Slieve Russell Hotel Property Ltd show the company recorded a pre-tax loss of €1.46m in the 12 months to the end of June 2024. The pre-tax loss of €1.46m followed a very modest pre-tax profit of €9,000 in fiscal 2023. The 2024 pre-tax loss arose from interest payments almost doubling last year, from €1.84m to €3.35m. The company recorded the pre-tax loss despite revenues rising by 7pc from €19.05m to €20.43m. The loss at the hotel firm came ahead of the reported €30m sale of the 224-bedroom hotel last October by CBRE on behalf of the liquidators of the Irish Bank Resolution Corporation, Kieran Wallace and Eamonn Richardson of Interpath Advisory. The new owner is Brady Hotels Ireland, run by an Australian-based developer from Co Cavan. At the time of the purchase, Tony Brady said the Slieve Russell would continue to be run by a local team. He pointed out that the resort employs hundreds of people locally, both full and part time, and 'is an important part of the community'. With the collapse of the Quinn empire, the IBRC, formerly Anglo Irish Bank, assumed control of the Slieve Russell hotel when a share receiver was appointed to the hotel firm in April 2011. The business recorded operating profits of €1.88m in the 12 months to the end of June last, with directors stating that improved trading figures are a direct result of the capital investment programme which commenced in 2022 and continued throughout last year. The directors state that 'additional costs were incurred during 2024 in preparing the underlying assets of the company for sale'. They state that 'the outlook for 2025 is positive, and trading in 2025 is expected to be in line with 2024'. The directors state that the company has experienced significant inflationary increases, particularly in relation to payroll related costs. Numbers employed last year decreased by one from 272 to 271 as staff costs rose from €8.3m to €9.1m. The loss also takes account of non-cash depreciation costs of €1.4m. Aggregate pay to key management last year decreased from €718,000 to €673,000. At the end of June last, the firm owed €68.2m to the IBRC and, subsequent to year end, the directors state that the loan liability owed by the company to IBRC was settled in full under the terms of a settlement deed and allowed the hotel sale to be concluded. Other hotels that were once in the Quinn empire have also been sold in the last year by the IBRC. Hotel Prague was bought by a Czech property holding company, and Buswells Hotel on Molesworth Street in Dublin has been purchased by Roundstone Real Estate.
Irish Times
16-05-2025
- Business
- Irish Times
Dublin-based CityJet reports loss of €16.8m in 2023
Troubled Dublin-based CityJet made a loss of €16.8 million in 2023 following a surge in operating expenses. The regional airline, which was once Ireland's third carrier after Aer Lingus and Ryanair, filed accounts for the year ended December 31st on Friday. They show operating expenses grew to almost €97 million from just under €80 million in 2022. At the same time, turnover came down from €131 million to €129 million mainly as a result of lower flying activities during the year. READ MORE The group had been in profit at the end of the previous 12 month period, when it made €4.7 million. [ Cityjet booked exceptional gain of €163m from examinership Opens in new window ] The main activities of the company, which was once best known for flying routes out of London City Airport, include aircraft, crew, maintenance and insurance, as well as wet leasing, where it provides serviced aircraft and crews to operate routes for other carriers. At the end of the year it had net liabilities of €35.6 million. The company has not operated any scheduled flights under its own name since 2018, and its difficulties have continued since then. The High Court appointed Kieran Wallace and Andrew O'Leary of Interpath Advisory Ireland as interim examiners in recent weeks, which was the third time the airline has sought protection from creditors since its inception. It survived one process in 1996 and again in 2020 after its fleet was grounded by the Covid pandemic. Under risks facing the business, it warned in the 2023 accounts that much of its revenue at that time was concentrated on one customer. It noted impending engine overhauls and other redelivery costs due to fall over the following year. The directors concluded there were material uncertainties that cast 'significant doubt' over its ability to continue as a going concern over the following year. It also pointed to Russia's invasion of Ukraine and the inflationary pressures brought about as a result. However, under subsequent events, it said it was able to sign 10 crew, maintenance and insurance lease agreements with various airline customers in June 2024, which would run to October 2028, as well as five other agreements of the same nature that would run to October 2025. The company also received funding by way of a loan amounting to €3.8 million that is payable in September 2029 and which bears 3 per cent interest per annum. The group had a tax liability of €160,000 at the end of the year, up from €150,000 a year earlier. It employed 605 people in the year, up from 582. It spent €48.1 million on staff, up from €45.5 million in 2022.
Irish Times
10-05-2025
- Business
- Irish Times
More turbulence at Cityjet as interim examiners called in
If companies were like cats then Cityjet might have just barrelled through the third of its nine lives. The High Court has just appointed Kieran Wallace and Andrew O'Leary of Interpath Advisory Ireland as interim examiners to the airline, once Ireland's third carrier after Aer Lingus and Ryanair . The company – which hasn't operated any scheduled flights under its own name since 2018, instead leasing aircraft and crew to other carriers such as Scandinavian airline SAS – is certainly no stranger to the process. Thursday marked the third time since its inception that the airline, once known for its London City Airport routes, has had to go cap in hand to the High Court, seeking its protection from creditors. It survived one process in 1996 and then again in 2020 after its fleet was grounded by the Covid pandemic. Now, Cityjet – which joined up with Spain's Air Nostrum to create a new regional airline group in 2023 – is in trouble once again. READ MORE With a lucrative Lufthansa contract set to end later this year as part of a strategic move by the German aviation giant, the Irish carrier requires breathing space, the court heard, having spent €13 million or so pursuing the contract. Of particular issue are amounts owed to Canadian aircraft lessor EDC, which Cityjet is unable to pay. The most recent set of accounts for Cityjet, which are now out of date, showed its total liabilities exceeded assets by €18.2 million at the end of 2022, with accumulated losses of €476.8 million having built up there by that stage. The net deficit has since grown to €38.5 million, the court heard. On Thursday, Mr Justice Michael Quinn appointed the examiners on an interim basis, pending a full hearing of the petition on May 26th, to which any particularly peeved creditors can object. Still, the company, which employs more than 124 people in Dublin, is confident that it has a future if it can successfully restructure, according to sources familiar with the situation. In the meantime, spare a thought for the non-preferential creditors.
Irish Independent
23-04-2025
- Business
- Irish Independent
IBRC liquidators pay €250m to Exchequer as preparation underway to hand work over to NTMA
The money is in addition to €110m distributed to the Exchequer in the 25 months up to January this year, according to the latest progress report from special liquidators Eamonn Richardson and Kieran Wallace, who were appointed in 2013. The Eleventh Progress Update Report outlines the first substantial recovery for taxpayers of any of the around €34bn pumped into Anglo Irish Bank and INBS to prevent them both collapsing during the Irish banking crisis, although the bulk of those funds will never be recouped. Further payments to the State are expected as liquidators work through remaining loans that have a face value of €3.1bn, although their true value in the current market may be significantly lower. Remaining assets include a luxury hotel in Prague that was once a prime asset of Sean Quinn. The Hilton Prague was formally put up for sale last year and has been tipped to fetch as much as €300m. The latest update from the special liquidators to Finance Minister Paschal Donohoe does not go into detail on specific borrowers or assets. It says legislative work is underway to create a unit within the National Treasury Management Agency (NTMA) to take over from the liquidators when their tenure ends later this year and manage any residual activity associated with the IBRC, including ongoing legal cases and any residual debtor/asset management activity required. The same unit will take over any business the National Asset Management Agency (Nama) has not concluded at the end of its term. Drafting of legislation to complete both a winding-up of IBRC and the dissolution of Nama had started last year but was interrupted by the general election and change of government. While the plan had been to transfer IBRC work to Nama once the special liquidation ends, the policy now will be to transfer the residual assets and responsibilities of both directly to the NTMA resolution unit. IBRC liquidators began with a loan portfolio that had a 'par' or face value of €21bn which had to be sold off to repay the outstanding debts of the two banks that crucially included bonds held by the Central Bank linked to the so-called Anglo Irish Bank promissory note. Over the 25 months covered by the 11th IBRC progress report, legal and professional fees incurred by the special liquidators were €8.6m. Total fees incurred since the beginning of the special liquidation in February 2013 up to January 31 of this year are €319.4m.
