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Interim examiner appointed to Norwegian Air companies

The airline has been severely impacted by the Covid-19 pandemic.

Image: Shutterstock/B.Forenius

THE HIGH COURT has appointed an interim examiner to several companies that are part of the Norwegian Air airline group.

The firms sought the appointment of an examiner due to financial difficulties mainly caused by the impact of the Covid-19 pandemic, the court heard.

The entities granted the protection of the court form their creditors are Arctic Aviation Assets DAC, Norwegian Air International Ltd, Drammensf Jorden Leasing Ltd, Torskef Jorden Leasing Ltd, Lysakerf Jorden Leasing Ltd, which are Irish registered.

The interim examiner was also appointed to its parent company Norwegian Air Shuttle ASA, which is Norwegian registered. As well as Ireland the airline has subsidiaries in Spain, the USA, Argentina, Denmark and the UK.

The Irish registered firms are involved in activities including the leasing, management and subleasing of assets, including aircraft, and financing.

At the High Court today Justice Michael Quinn said he was satisfied to appoint experienced insolvency practioner Kieran Wallace as interim examiner.

The Judge said while the firms were insolvent and unable to pay their debts as they fall due, an Independent Experts Report (IAR) presented to court stated that the firms have a reasonable prospect of survival if certain steps are taken.

These include the appointment of an examiner, the full implementation of a restructuring plan, including sourcing additional financing, that would ensure the future survival of the companies.

The judge noted that the IAR stated that creditors, which include aircraft leasing companies and financial lenders, would do better through a successful examinership process compared to if the group was put into liquidation.

The firms’ board of directors petitioned the court for the appointment of an examiner. They hope that Wallace can put together a scheme of arrangement with their creditors, which if approved by the court, will allow them to continue as going concerns.
The groups underlined business is good, the court also heard.

In addition, the companies represented by Brian Kennedy SC and Declan Murphy Bl, say the airline group is encouraged by recent reports about the future availability of a vaccine for Covid-19.

By 2019 the group employed over 10,000 staff and had operated 20 bases in 11 countries.

However last year was difficult for the group and it commenced several cost reduction measures aimed at restoring it to profitability.

Last March the airline was severely impacted by the outbreak of the Covid-19 pandemic. The court heard that since the start of the year the group has seen a fall in passenger number of approximately 78% form the same period in 2019.

Its revenue in the third quarter of 2020 is down by 91% on the same period in 2019. Operating losses had also increased to over €590 million, compared to €149m in 2019.

While the low-cost carrier group has gone into hibernation mode due to the pandemic, it still required cash of €8.4 million per month.

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The grounding of Boeing 737 Max and Boeing 787 Dreamliner aircraft, due to technical difficulties had also adversely affected the airlines finances, the court also heard.

These difficulties, particularly the wholly unprecedented impact of the pandemic and travel restrictions had hit the entire aviation sector.

With the sudden loss of revenue, the group was not capable of complying with its obligations to make repayments to its creditors.

While it had entered into arrangements regarding its debts under a restructuring plan the Norwegian government announced earlier this month that it would no longer provide any more State financial support to the group.

This resulted in several creditors commencing actions against the group.

After appointing Wallace as interim examiner, the judge adjourned the matter to a date in December.

About the author:

Aodhan O Faolain

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