High Court confirms appointment of examiner to CityJet in effort to save 417 jobs in Dublin

The decision gives Mr Wallace, who earlier this month was appointed on an interim basis, up to 100 days to formulate a scheme of arrangement with the airline's creditors which, if approved by the High Court, will allow the business to survive.

The airline and its subsidiaries, which flies routes on behalf of other airlines including SAS and Aer Lingus and employs 1,175 people, 417 of whom are based in Dublin, believes that it can continue.

There were no objections to the airline being granted the protection of the courts from its creditors, some of whom Mr Justice Quinn was told by Rossa Fanning SC for CityJet, were supporting the application.

The airline said it became insolvent arising out of financial difficulties which were exacerbated after its fleet of over 30 aircraft was grounded due to the Covid-19 outbreak.

The impact of the virus interrupted a planned merger with another airline and a proposed private restructure of the company, it claimed.

James O'Doherty SC for Mr Wallace said in the short time his client has been involved with the airline there has been at least one expression of interest from a potential investor.

In his ruling, Mr Justice Quinn said he was confirming the examiner's appointment on grounds including that an independent expert’s report had stated the company has a reasonable prospect of survival if certain steps were taken.

The judge said the number of people employed in the company was a relevant factor, and noted that during its history the company has overcome several challenges.

The judge said that while there was a lot of uncertainty as to exactly when air travel can resume he noted the support CityJet had received from its main customer SAS.

SAS, on whose behalf CityJet operates several regional services, hopes there will be a gradual return to flying in June or July.

While there were no objections to the application to confirm the examiner's appointment, the judge said he was satisfied to make orders sought by the Revenue Commissioners, including that it be made a notice party to the matter.

Revenue had raised concerns about the examinership application, and the court heard the company had responded to and was answering Revenue's questions.

The court heard the parties are in dispute over a €23m tax demand made by Revenue on the airline for the years 2016, 2017 and 2018.

Those assessments, which CityJet contends it does not have to pay, have been appealed to the Tax Appeals Commission by the airline.

The airline, which no longer flies scheduled routes itself has moved to a model known in the aviation industry as wet leasing where it provides serviced aircraft and crews to operate routes for other carriers.

In each of the last three years the airline had revenues of over €220m. It made a profit in 2017, but suffered significant losses in 2018 and 2019 due to various factors.

It has debts of €500m, and currently has a net deficit of liabilities over assets on a going concern basis of €186m.

Its creditors include the Triangle Group, firms involved in the leasing of aircraft, Investec, the Revenue Commissioners, as well as debts owed to related companies.

In order to counter its difficulties, plans had been put in place with its creditors to restructure the business and merge with Spanish airline Air Nostrum.