Astraeus rescue talks continued into January - administrator

This story is sourced from Pro
See more Pro news »

A potential rescue for collapsed UK wet lease specialist Astraeus Airlines was alive as recently as early January, but appears to have since faded after talks foundered.

The company was placed into administration on 22 November after its parent company, Icelandic firm Eignarhalsfelagid, which also owns Iceland Express, declined to pump any further funds into the loss-making carrier.

Nick Cropper, Alastair Beverage and Anne O'Keefe from Zolfo Cooper were duly appointed as administrators of the Gatwick Airport-based airline.

In its statement of administrators' proposals, dated 13 January but only released publicly on 25 January, it reveals attempts to resurrect the carrier via a Creditors Voluntary Agreement (CVA).

In the period before the Christmas break, Zolfo Cooper received three bids for Astraeus, with one granted preferred status, it said. However, this offer was withdrawn on 5 January, leaving the administrator to approach the two other interested parties.

One bidder was ruled out and "discussions continue with the remaining party to establish whether a transaction can be formulated", it said. However, it noted that these would be concluded "in the next couple of days". Zolfo Cooper was not immediately available to comment on the status of those discussions.

It pointed out that if the rescue via a CVA does not materialise, then a sale of the company's assets would follow.

Interestingly, one potential asset Zolfo Cooper is considering is its allowances under the EU Emissions Trading System. Astraeus would have been allowed to emit 97,012t of CO2 this year, and the administrators are seeking advice on whether the airline can still obtain the permits, even if the CVA is not pursued.

With permits trading at around €7 per tonne, it notes, a sale could net the administrators €679,084 when the trading system goes live in June 2012.

Astraeus' AOC remains suspended until 22 March, it said, "although should a suitable offer for the company be received which the CAA is prepared to sanction, it may be that the suspension of the AOC is removed".

The report blames the airline's closure on the parent company's decision to withdraw its support after Astraeus encountered trading difficulties in the autumn of 2011.

Although Iceland Express paid November's flying expenses, the report said, additional help from the parent company was not forthcoming "due to the lack of guaranteed future income, estimated ongoing losses and the level of their existing commitment".

Zolfo Cooper estimates Astraeus had a total deficiency of £44 million ($69.7 million) when it ceased trading.