The restructuring plan assumes that operations will be maintained and that unsecured creditors will receive only a fraction of their claims.
Prague City Air, founded at the end of January, is to become a new investor in Czech Airlines. This follows from the reorganization plan published by the court in the insolvency register. Smartwings, which owns the majority of shares in Czech Airlines, has been tasked with drawing up the plan.
The sole owner of Prague City Air is Canaria Travel Group, owned by Unimex Group of Jiri Simane and the Vik family companies. The Czech owners of Smartwings can thus move into Czech Airlines without the Chinese investor in Smartwings.
The plan anticipates that Prague City Air will provide a settlement loan of CZK 125 million from which creditors will be paid. At the same time, they will provide an operating loan of CZK 15 million to Czech Airlines. The shares of the existing shareholders are to be canceled. The loan will be provided against property, an Airbus A319 (OK-REQ), the only aircraft Czech Airlines owns. The plan must be approved by the creditors.
The plan provides for more than 50 % satisfaction of two secured creditors: Quiver Beta (CZK 55 million) and Lufthansa Technik (CZK 3 million). The other creditors will receive 4.6% of the value of their claims. According to the plan, Airbus will then withdraw its huge claims of CZK 17.3 billion for aircraft that were not taken over.
The value of Czech Airlines’ unsecured assets was set at CZK 253 million. Creditors among customers who had tickets and did not fly because of the pandemic should have time to redeem their vouchers this year.
The restructuring plan outlines the importance of further linking Czech Airlines with the Smartwings Group. The plan anticipates revenues of around CZK 1 billion this year and earnings of CZK 313 million from the sale of emission allowances.
According to the business plan, an A319 OK-REQ aircraft and a leased A320 OK-HEU aircraft will be sufficient for Czech Airlines to operate this year. However, the only aircraft it owns will be put out of operation at the end of the year for planned maintenance on both engines. In 2023, a total of five Smartwings aircraft should help out Czech Airlines. From the third quarter of next year, four new Airbus A220s are to join the fleet through long-term leases. These were originally ordered by Czech Airlines, but the order was canceled.