Article

Navigating volatility and distress

Mark Degnan, Director, Deloitte Financial Advisory Services (Restructuring), says acting early will provide more options to your business.

In the midst of Covid-19, the aviation sector has been one of the hardest hit with an all but collapse in passenger numbers after widespread travel bans and global lockdowns. As of June, the International Air Transport Association (Iata) expects the airline industry to lose up to $419 billion, with 7.5 million flights having already been cancelled.

Given the uncertainty surrounding a vaccine for Covid-19 and reopening of travel routes generally, estimated losses could increase further, while impacting all stakeholders to include airlines, lessors and lenders within the sector. While airlines worldwide slash employment numbers, seek government support and deferrals of lease payments, many stakeholders need to look beyond the short-term effects of Covid-19, and at their options for long-term survival.

With this landscape in mind, the focus of this article is to outline some of the restructuring options available to all stakeholders within the sector, and through some recent cases and our market experience outline the range of processes which can be accessed for a successful conclusion and restructure of a business in the current stressed environment

Navigating volatility and distress

Article highlights

  • Key  challenges facing the industry
  • Key stakeholders within the sector which will be engaged in the restructure process 
  • Restructuring options
  • Part 9 Scheme of Arrangement - Ireland
  • Examinership process - Ireland
  • Chapter 11 - US
  • Non-formal processes – consensual negotiations
  • Ad-hoc groups
  • INSOL Statement of Principles for a Global Approach to Multi-Creditor Workouts (2000) 

 

This article first appeared in the 2020/21 AirFinance Journal Annual

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