Bancarotta per Blue Air
BUCHAREST (Romania), July 6 (SeeNews) - Romanian low-cost carrier Blue Air said on Monday that the Bucharest municipal court has approved its request to enter a concordat procedure with its creditors in order to avoid insolvency after the coronavirus disease (Covid-19) pandemic affected its revenues.
This procedure, by which debtors in financial difficulty agree with creditors on the payment of debts thus ensuring the company's viability, is part of Blue Air's restructuring strategy after in the March-June period the Covid-19 pandemic led to a decline by more than 100 million euro ($113 million) in revenues compared to plan, the company said in a press release.
By entering the preventive concordat procedure, Blue Air will be able to prioritise costs related to the operation of regular flights after July 16, once the national state of alert is expected to end.
With the resumption of the normal flight schedule in mid-July, Blue Air hopes to be able to generate revenues necessary to pay its debts in 18 months-time.
Losses directly generated by the pandemic will be covered by state aid approved by the Romanian government in April. The government announced at the time that it has approved a total 130 million euro in loans to Blue Air and state-owned airline Tarom to help them overcome a slump in revenues due to the coronavirus pandemic. It is not clear how the funding will be split between the two airlines.
In April, Blue Air asked the government for a loan at a preferential interest rate in order to maintain flight capacity and jobs. Over 90% of Blue Air's employees were put into technical unemployment in April.
As of July 1, Blue Air has resumed scheduled flights to 29 destinations and plans to return to at least 47 destinations once the state of alert ceases and all restrictions are removed.
In June, Romanian investment fund SIF Banat-Crisana [BSE:SIF1] said that it has agreed to extend by three months the maturity of Blue Air bonds it acquired in December 2019 due to the Covid-19 outbreak.
SIF 1 injected 43 million lei ($10 million/8.9 million euro) into Blue Air via a private placement of bonds in December. SIF1 Banat-Crisana bought 90 bonds which were to mature on June 15, 2020.
Blue Air, the only air carrier in Romania with 100% domestic capital, started operations in December 2004. In 2013, it was taken over by Airline Management Solutions Company for 30 million euro.
The airline has bases in Romania, Italy, the United Kingdom and Cyprus and a fleet of 29 aircraft. Blue Air operates flights to more than 100 destinations in 20 countries.
(1 euro=4.8314 lei)