Page 10 - Irish Examiner USA

businessexaminer
10

2020 Court Signs Off On Shannon May Lose Aer Lingus
Transatlantic Flights To UK
2nd, Virgin Atlantic Bailout Airport may be
S h a n n o n
September transatlantic
lose
set
to
routes due to
irgin Atlantic’s £1.2 billion
(€1.35 billion) bailout has
UK Companies Act 2006, to
sustainable level” and “provide
| Vbeen signed off by a UK reduce the airline’s debt to “a process under Part 26A of the the on-going
impact
of
secure approval from certain
new liquidity so that the group
EXAMINER HighCourtjudge. will be able to continue trading creditors before implementa- Covid-19 on
aviation
the
Last week, the airline’s cred-
for years to come”.
tion.
sector.
Mr Allison said the recapital-
“Today,
Atlantic
itors voted to approve the deal,
Virgin
The flights to New York and Boston, as well as London
IRISH which the airline said was a ization arrangements are “the attended an English High Court Heathrow, which are currently operated by Aer Lingus could be
“significant milestone in safe-
product of extensive negotia-
hearing where the restructuring
axed if the airline decides to shift the services to the UK, accord-
guarding its future”.
tions” over “a couple of
plan was formally sanctioned.
At a remote court hearing months”, adding: “It is the only “A US procedural hearing ing to The Irish Times.
on Wednesday, Mr Justice possible deal that can be imple- will follow tomorrow, 3 The company’s two Airbus A321 long-range aircraft have
Snowden sanctioned the mented in the short time avail- September, ensuring the been grounded at Shannon since March due to restrictions on
restructuring plan – a key step able before the group collaps- restructuring plan is recognized international travel caused by the pandemic.
of the process for Virgin es.” in the US, paving the way for Six UK airports, including Edinburgh and Manchester, are
Atlantic to implement the res- Creditors are being asked to completion of the £1.2 billion believed to be interested in the two aircraft.
cue package. accept 20% less than they are private-only, solvent recapital- It is reported that if a deal is made any service would be like-
The senior judge said: “This owed, and for repayments to be ization of Virgin Atlantic. ly to begin in 2021 and run for an initial three years.
is a plan that I propose to sanc- rescheduled. “Achieving this significant The loss of the US flights would be a devastating blow for the
tion.” The airline has previously milestone puts Virgin Atlantic western airport, leaving Shannon with just one service to
He said this will allow the insisted that without a “solvent in a position to rebuild its bal- America.
airline to make the plan effec- recapitalization” its directors ance sheet, restore customer American Airlines would be the last remaining transatlantic
tive by Friday. would have “no choice” but to confidence and welcome pas- service provider if Aer Lingus were to pull out of Shannon, fol-
The £1.2 billion rescue deal, place it into administration, sengers back to the skies, safely, lowing the confirmation of Delta and United Airlines that they
announced in July, involves which would “result in a poor as soon as they are ready to would not be resuming their flights from Shannon in 2021.
only private funds, and includes outcome for the company’s travel.” Prior to this, Aer Lingus told the Government that it may
a cash injection of £200 million creditors”. Virgin Atlantic has said it have to cut up to 500 jobs, from a total of 4,500, as it deals with
from founder Sir Richard In a statement after the hear- does not expect demand for air the ongoing impact of Covid-19 travel restrictions.
Branson’s Virgin Group. ing, a Virgin Atlantic spokesper- travel to return to pre-pandem- Responding to the potential relocation of Aer Lingus servic-
David Allison QC, for Virgin son said: “In order to complete ic levels until 2023. es, Ennis Chamber, which aims to promote business in the Co
Atlantic, told the court that four the private-only, solvent recapi- In May it announced it Clare town and the surrounding areas, said that it was “deeply
creditor meetings were held last talization of the airline, our would shrink its operations, concerned” with the impact it would have on the airport and the
week, with 100% attendance restructuring plan has gone including closing its Gatwick area it serves.
and 100% approval at three of through a court-sanctioned base and cutting 3,550 jobs. C Ennis Chamber CEO Margaret O’Brien said a lot of foreign-
them. direct investment is based in the region due to its connectivity.
The fourth saw the deal “Over 40 per cent of US foreign direct investment in Ireland
approved by the vast majority is located within the Shannon Airport catchment area and that is
of those present and voting. possibly a figure that not many people are familiar with, but it’s
In written submissions, Mr such a large percentage of our FDI in Ireland and that accounts
Allison said it was “in the best for over 20,000 jobs in the region.” C
interests of all stakeholders” to
reach an agreement that Australia Enters Recession For
enables the airline “to survive The First Time In 28 Years
and thrive as a going concern”. Australia’s economy suffered its sharpest quarterly drop since
He said the firm is proposing the Great Depression because of the pandemic, with official data
the deal as part of a wider suite released this week confirming the country is experiencing its first
of financial arrangements with recession in 28 years.
creditors and others, which will The latest national accounts showed the economy shrank 7%
in June, the biggest contraction since records began in 1959.
Its nearest rival was a 2% fall in June 1974, though economists
estimate a sharper fall in the early 1930s when Australian
became one of the countries hardest hit by the Great
Depression.
Combined with a smaller 0.3% drop in the March quarter,
the definition of a technical recession – two consecutive quarters
of contraction – has been fulfilled.
Treasurer of Australia Josh Frydenberg said: “Today’s nation-
al accounts confirm the devastating impact on the Australian
economy from Covid-19.”
“Our record run of 28 consecutive years of economic growth
has now officially come to an end.”
The country’s prime minister Scott Morrison told parlia-
ment: “This is a devastating day for Australia.”
Organization for Economic Cooperation and Development
figures show the average contraction among OECD countries in
the June quarter was 9.8%, including a 20% slump in the UK, a
14% downturn in France and a 9.1% drop in the US. C