High Court extends Cityjet’s period of protection to 100 days
Posted on 25th June 2020 at 22:00
Judge refuses request by pilots’ union to extend statutory notice period of redundancies
The High Court has agreed to extend from 70 to 100 days the period of protection from creditors for regional airline Cityjet.
However, Mr Justice Michael Quinn refused a request by Evan Cullen, president of Ialpa, the airline pilots’ trade union, to also extend the 30-day statutory notice period of redundancies, due to expire this week in the case of Cityjet pilots.
Ialpa represents most of the airline’s Irish-based pilots who held a protest this week over alleged outsourcing of their 57 members jobs by having aircraft registered in Ireland flown by pilots outside of the country.
On Thursday, Mr Cullen asked the judge to order no redundancies are notified to Ialpa’s members until the matter is next before the court. He wanted the consultation period continued so every option can be considered before completion of the examinership process which has significant repercussions for the livelihoods of the pilots, he said.
Ialpa intends to instruct lawyers on the issue and he considered the order sought would not affect the airline’s finances as his members remain on the wage subsidy scheme.
The judge said the court did not have jurisdiction to grant such an order within the context of an examinership hearing but that did not preclude Ialpa making a separate application in relation to any proposed redundancies. The judge asked lawyers for the company and the examiner to take note of the concerns raised by Mr Cullen.
In relation to the company’s application to extend the examinership period to 100 days, the maximum allowed here, Mr Justice Quinn said he was satisfied to do so, as all the required criteria had been met.
The examiner, Kieran Wallace of KPMG, has until July 25th next to formulate a scheme of arrangement with the airline’s creditors aimed at securing the survival of the business.
In a report, Mr Wallace, appointed Cityjet DAC’s examiner in April, said the examinership was progressing and there had been positive engagement with a proposed investor in the airline. Mr Justice Quinn noted the airline had recommenced flying routes on behalf of its biggest customer SAS, which was “welcome news”.
Seeking the extension, James Doherty SC for the examiner said his client was confident of being able to put a scheme of arrangement to the creditors. Counsel accepted there would be redundancies, but said the number of job losses had not been put before the court as negotiations were ongoing.
In April the airline sought court protection claiming it was insolvent due to financial difficulties exacerbated after its fleet of more than 30 aircraft was grounded due to the Covid-19 outbreak. The impact of the pandemic interrupted a planned merger with another airline and a proposed private restructure of the company, it said.
The airline and its subsidiaries fly routes on behalf of other airlines including SAS and employ 1,175 people, 417 of whom are based in Dublin. Cityjet no longer flies scheduled routes itself, and has moved to a model known in the aviation industry known as “wet leasing” where it provides serviced aircraft and crews to operate routes for other carriers.
In each of the past three years Cityjet had revenues of more than €220 million. It made a profit in 2017, but suffered significant losses in 2018 and 2019 due to various factors. It has debts of €500 million, and has a net deficit of liabilities over assets on a going concern basis of €186 million. Its plans to restructure its business and merge with Spanish airline Air Nostrum were interrupted by the global shutdown and travel restrictions caused by the pandemic. The examinership will return before the courts in late July.
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