Swedish cargo airline West Atlantic is considering looking for additional shareholders to recapitalize the company, in the light of costly delays in bringing in new freighters to its fleet.
West Atlantic has during 2017 reported negative results, to a great extent due to high start-up costs caused by delayed deliveries of aircraft for the new Royal Mail contract, which is the company´s largest contract ever with revenues of around 3 billion SEK during the 5 year contract term. These delays caused the company to sub-charter aircraft from other airlines, and incur double the cost for many items during the period January-September 2017.
The losses have been reported in the Q1 and Q2 interim reports, and have continued during Q3 reducing the equity and liquidity. As a consequence, the company does not fulfill the “Maintenance Test” as per September 30, 2017 as stipulated in The Terms and Conditions of the company’s corporate bond loan.
The management and the Board of Directors foresee no immediate consequences for operations or the company’s ability to pay its debtors. A turnaround and a return to profit is foreseen in Q4, not least because of an expected sale of aircraft, not required for operations, to be concluded. If the aircraft sales are not concluded during Q4, the company might once again have difficulties to fulfill the “Maintenance Test” as per December 31, 2017.
Due to the company’s development, the Board is focused on re-establishing and maintaining compliance with the bond’s “Maintenance Test” going forward and, accordingly, is exploring possibilities to re-capitalise the company through an equity injection and/or other alternatives to increase the company’s liquidity levels.
On 20 June 2017, West Atlantic announced it will take delivery of four leased Boeing 737-800(BCF) from GE Capital Aviation Services, with the aircraft being delivered between 2017 and 2019.