Norwegian creditors challenge airline’s bid to return aircraft to lessors
Airline and Irish subsidiaries have High Court protection from creditors
NAS and four Irish subsidiaries are under High Court protection from creditors while examiner Kieran Wallace of KPMG works on a rescue plan for the Scandinavian carrier.
Norwegian Air Shuttle (NAS) creditors are challenging the airline’s bid to return more than 30 aircraft to suppliers, a key part of plans to rescue the group.
NAS and its Irish subsidiaries, Arctic Aviation Assets, Norwegian Air International, Drammensfjorden Leasing and Lysakerfjorden Leasing, are under High Court protection from creditors while examiner Kieran Wallace of KPMG works on a restructuring plan for the Scandinavian carrier.
The five companies have asked the court to repudiate leases over 36 aircraft, allowing them to hand the aircraft back to lessors, in order to cut its it fleet as part of the proposals to keep NAS in business.
Lawyers for several lessors complained on Thursday that they had not had enough time to deal with concerns raised by the companies’ applications to the court, including potential complications arising from the fact that some agreements were governed by English law.
Industrial and Commercial Bank of China (ICBC) leasing, which has supplied 10 aircraft to Norwegian, argued that the companies’ applications lacked information and analysis to allow the court to assess how the leases were onerous.
Mr Wallace’s senior counsel, Paul Sreenan, warned that the examinership was on day 79 of 100, so it is due to end in three weeks’ time.
NAS wants to cut its fleet by more than half to 68 from 140 and axe its long-haul business to focus on flying in Scandinavia and Europe.
One Irish subsidiary, Torskefjorden Leasing, which was leasing 24 aircraft and was part of the examinership, is in now liquidation, so is no longer part of the High Court proceedings.
The five companies that remain in examinership are leasing 48 aircraft, including the 36 involved in the application to end those agreements.
Repudiation involves the company ending lease agreements or contracts, but paying the creditors involved one settlement based on the amount owed on the date the company went into examinership, and a second settlement covering liabilities from the period of the examinership itself.
The lessors then gets the same dividend as all others on the difference between the total the company paid in the settlements and the full amount due.
Mr Justice Michael Quinn proposed allowing until Friday, February 12th for creditors to reply to the companies’ applications. The issue is due back before the court on Monday, February 15th.
Also on Thursday, NAS and its subsidiaries asked the court to repudiate contracts with various suppliers, including Irish company, In Flight Audio, fuel and catering businesses and US airports such as Boston Logan.
Brian Kennedy, the NAS companies senior counsel, pointed out that the contracts’ termination would date from the point at which the group emerges from examinership.
Mr Justice Quinn said he would rule on those applications, which are not contested, next week.