Ireland’s High Court has appointed an interim examiner to Aer Arann, after learning that the Irish regional airline is struggling to service debt obligations as a result of sharp falls in traffic and the disruption and costs of the Apr-2010 ash cloud crisis (Breaking News/RTE News/Irish Times, 26-Aug-2010). The decision gives Aer Arann court protection from its creditors and allows the examiner to implement a restructuring plan. Michael McAteer of Grant Thornton has been appointed as interim examiner to the airline after it was announced that an independent accountant's report revealed the airline has a “reasonable prospect” of survival if certain steps are taken. Aer Arann advised that all services will continue to operate as normal, with no impact on customer travel or bookings. Aer Arann has incurred an estimated EUR188.5 million in losses over the past two-and-a-half years, which the airline stated "led to a deficit in shareholder funding of approximately EUR13 million at the end of July this year".
Aer Arann suffers financial problems; examiner appointed by High Court
You may also be interested in the following articles...
IAG lowers plans for capacity growth, fleet investment & profit, but keeps return on capital target
IAG's Capital Markets Day on 4-Nov-2016 was the first since its formation in 2011 when it lowered any of its medium term financial targets. It cut its 2016-2020 average EBITDAR goal, in spite of adding in Aer Lingus for the first time. This followed two cuts to 2016 operating profit guidance during the course of this year, as a result of "a tough operating environment". It has been hit by adverse currency movements, mainly resulting from the UK's Brexit vote, in addition to ATC strikes and terrorist events.
To its credit, IAG has responded to the more challenging trading conditions by lowering its planned capacity growth and capital expenditure during its 2016-2020 strategic plan. These steps are necessary if it is to have a chance of meeting its ambitious goal to sustain a 15% return on invested capital. This target is unchanged, despite the lower profit outlook.
In 3Q2016, IAG's rolling four quarter return on capital fell, after rising more or less continuously since it began to target this measure in 2013. It has consistently been more profitable than either of its two main European legacy airline group rivals (Air France-KLM and Lufthansa). Nevertheless, the downward step highlights the challenge in meeting its own demanding target.
CityJet: regional airline consolidator is re-energised & refocussed after second change of ownership
It is just over six months since CityJet chairman, Pat Byrne, and a group of private investors bought the airline from previous owner Intro Aviation. Meanwhile, CityJet has received its first two Sukhoi Superjets this summer. With 13 more scheduled for delivery by 2018 they will be replacements for its ageing BAE146 fleet at London City Airport, but the Superjet first needs steep approach certification. This will be important in restoring profitability to CityJet's refocused core network at London City.
In addition, CityJet has a growing presence in contract flying for other airlines. It inherited an Air France wet-lease operation at Paris CDG from its days under Air France-KLM ownership and acquired an SAS regional operator a year ago. Recent reports of possible consolidation involving CityJet in the European regional contract flying space demonstrate that it now has a higher profile and greater credibility than at any time for many years.
Although unconfirmed, these reports link CityJet with another SAS regional operator, Cimber, and with Stobart Air, which operates wet-lease capacity for Aer Lingus and Flybe. Even if they do not come to fruition, reports of such transactions are a sign of CityJet's increased status and revitalisation after years of near invisibility as part of Air France-KLM.