The High Court has appointed a interim examiner to the Dublin-based regional airline CityJet.
The airline and its subsidiaries, which flies routes on behalf of other airlines including SAS and Aer Lingus, employs 1,175 people, more than 410 of whom are based in Dublin.
The airline, best known for flying routes out of London City Airport, sought the protection of the courts from its creditors due to financial difficulties, which were exacerbated after its fleet was grounded by the Covid-19 outbreak.
The impact of the virus, the company's counsel Rossa Fanning SC told the court, interrupted and adversely affected a planned merger with another airline and a proposed private restructure of the company.
However, despite the uncertainty in the aviation caused by the pandemic, CityJet says that the business can be saved following a successful examinership process.
At the High Court today, Mr Justice Garrett Simons said he was satisfied to appoint experienced insolvency practioner Kieran Wallace of KPMG as interim examiner to CityJet DAC.
The judge said while the company was insolvent and unable to pay its debts as they fall due, he accepted evidence from an independent expert that the airline has a reasonable prospect of survival if certain steps are taken.
Those steps include a successful restructuring of the airline and the examiner putting together a scheme of arrangement with the company's creditors, which if approved by the High Court will allow the firm to continue to trade as a going concern.
Cost-cutting measures have also been introduced, which the company says will result in the saving of millions of euro.
Mr Fanning said the company founded by respected entrepreneur Pat Byrne, who is one of the company's current directors and its executive chairman, had been in business since the early 1990s.
Counsel said the company, which no longer flies scheduled routes itself, and has moved to a model known in the aviation industry known as wet leasing where it provides serviced aircraft and crews to operate routes for other carriers.
In each of the last three years the firm had revenues of over €220m. The company had made a profit in 2017, but suffered significant losses in 2018 and 2019 due to various factors.
The company has debts of €500m, and current has a net deficit of liabilities over assets on a going concern basis of €186m, counsel said.
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.
The airlines fleet of 33 aircraft, which mainly flies routes around the Nordic countries and Scandinavia, were grounded as a result of the outbreak.
Counsel said that there were positive aspects, including that company's main customer SAS has agreed to support it during the current hiatus, and that there had been positive engagements with its creditors.
Counsel said while a return to commercial flying was uncertain the company expected that its services will return gradually over the coming months, and that the company could make a profit if the examinership process is successful.
Counsel said that the appointment of an examiner would be beneficial for all parties concerned.
The Judge said that he was satisfied from the evidence put before the court that an interim examiner should be appointed to the firm.
The examinership the judge said would be a complex one, when all matters including the amount of debt involved were taken into account, and he said not time should be lost in a process that must be completed within 100 days.
After approving Mr Wallace's appointment as interim examiner, Mr Justice Simons adjourned the matter to a date later this month.