Lessor Nordic Aviation Capital (NAC) expects to exit Chapter 11 bankruptcy protection before the end of May following the approval of its restructuring plan by the Eastern District of Virginia Bankruptcy Court. NAC said on April 19 that it had received “overwhelming support from equity holders and creditors” for the plan. NAC hopes to exit Chapter 11 by the end of May.
Based in Ireland but with roots in Denmark, the lessor specialized in regional aircraft filed for Chapter 11 protection in December 2021 with $6.3 billion in debt. The restructuring plan intends to slash this by $4.1 billion through equitization, the sale of aircraft, and recapitalization transactions. The $4.1 billion mentioned in a press release is lower than the $4.6 billion in debt reduction targeted in December, which was 73 percent of $6.3 billion. NAC said in December that it had to restructure following the Covid crisis, during which the lease collection rate dropped to forty percent as lessees suffered from a lack of liquidity. The company has been working on its plan since January 2021.
Since December, Nordic Aviation has succeeded in its plan to raise $337 million in fresh equity and $200 million in new revolving credit loans. During Chapter 11, creditors provided $170 million in Debtor in Possession funding to continue operations. The debt restructuring and capital injection offer NAC significant financial flexibility to continue its long-term growth and preserve its strength. All existing equity holders and 99 percent of voting creditors have supported the plan.
Yet, the post-restructuring Nordic Aviation will be significantly smaller. The lessors entered Chapter 11 with a managed and owned fleet of 469 turboprop and regional jets, including many variants of the ATR, Embraer E1-jets, and De Havilland Canada Dash 8-family. This fleet will be reduced to 350 aircraft. NAC maintains its existing orders for 64 aircraft, including nineteen ATR 42s, 25 -72s, five Airbus A220-100s, and fifteen -300s (main picture). This order was announced at the 2019 Paris Airshow. NAC leases aircraft to 68 customers.
“With the Court’s approval of our plan and a committed new investor group, we are poised to exit Chapter 11 by the end of next month as a well-capitalized company, with the flexibility and resources to position ourselves for rebound and growth. We appreciate the dedication and support of our employees, customers, and partners during this process and the strong support of our creditors”, CEO Norman Liu says in a media statement.
