Blue Air, which is the largest Romanian airline company by passengers flown, has entered a status close to insolvency. The airline company filed for a preventive agreement (lat. concordato preventivo) at the Bucharest Tribunal, accepted by the Court.
This status is a mechanism which can help the companies financially affected by Covid-19. The decision of the tribunal was issued on Monday, July 6 2020.
„It admits the request of the debtor BLUE AIR AVIATION SA. Pursuant to art.23 paragraph 1 of Law no.85 / 2014, regarding the insolvency prevention and insolvency procedures, it opens the preventive composition procedure of the debtor BLUE AIR AVIATION SA. Pursuant to art. 23 par. 2 of the law appoints a temporary contractor on KPMG RESTRUCTURING SRL. Enforceable. With the right to appeal within 7 days from the communication. The appeal request will be submitted to the Bucharest Tribunal, civil section VII. Judged in the council chamber and pronounced in public session, today, 06.07.2020” it is shown in a decision of the Bucharest Tribunal.
How close is Blue Air from insolvency?
The main difference between concordato preventivo and insolvency is that during the first state it is possible for the company to negotiate directly with most creditors the ways and terms of debt coverage. This allows the debtor to recover economically and at the same time offers creditors a better perspective of debt recovery than in the case of insolvency proceedings.
Another important difference between concordat and insolvency is that concordat determines the payback of debts much faster than during the insolvency proceedings.
Blue Air is the largest Romanian airline company, with 5 million passengers flown in 2017 and almost EUR 500 M in revenues in 2018. In the same year, 2018, the legal status of the company was changed, from a limited liability company to a joint-stock company. It mostly operates flights in a low-cost regime and its main competitor on the local market is WizzAir.