THE crises that have struck Russia in recent months are being put forward as the reasons that Shannon-based Transaero Engineering Ireland had to seek the protection of the courts this week.
The aircraft maintenance company entered an examinership process on Monday with the aim of securing its future. It currently has 230 employees and around 40 contract workers.
Examinership gives struggling companies breathing space as it gives them protection from creditors for 100 days, during which time the court-appointed examiner, in this case Michael McAteer of Grant Thornton, reports back to the court with recommendations.
While the majority of businesses that enter examinership do continue to trade after successfully exiting, the examiner has to find there is a reasonable prospect of it becoming viable.
Formerly Air Atlanta Aero Engineering, the company came under Russian ownership when it was purchased by Transaero Airlines almost three years ago.
In a statement published on its website on Tuesday, TransAero Engineering Ireland (TEI) outlined the difficulties that led to it entering examinership, while it also expressed confidence in its own ability to survive the current crisis.
“The global geo-political and economic climate has been having increasingly negative effects on TEI’s parent company, the Russian airline, Transaero Airlines. The combined impact of the EU/US trade sanctions, geo-political tensions, the fall in the price of oil and the rouble currency crisis continue to impact on economic activity within Russia and between many of its main trading partners.
“Business and leisure travel has been increasingly hit with a direct impact on airlines. Also, the funding of business has been severely impacted by the difficulties being faced by financial institutions in Russia.
“This has created serious financial difficulties for Transaero Airlines, who rely on the support of the Russian banks and make many of their payments in euro and dollars. The net effect of these events has resulted in TSO seeking Russian government support/financial aid.”
The statement said that Transaero Airlines cannot pay TEI monies due for services rendered, nor can it support TEI on an ongoing basis. Despite this, it also expressed confidence that it can secure sufficient alternative business.
“TEI intends to use the court protection period to restructure its business and to work with its existing core base of quality customers. TEI is confident that, in addition to the current customer base, a number of new third-party customers will be secured to enable it create a strong business going forward. The company will continue to trade as normal during the period and wishes to thank all of its suppliers, customers and over 230 employees for their continued support.
“Furthermore, the company is having initial contacts with a potential investor, with a view to securing an investment that will put the company on a solid footing. It is anticipated that an arrangement could be reached within the timeframe of the examinership period.”
Speaking on Tuesday, Mr McAteer said he was working to get a handle on the company’s situation quickly.
“It’s been a bit hectic today. What we’ve been doing over the last 24 hours is a combination of making calls, getting under the bonnet to understand all the bits and pieces and making sure that customers are as comfortable with the process as they possibly can be, that they continue to work and trade with the business. That’s really important. On the other side, we’ve been talking to key suppliers and creditors so that they continue to supply, so we can run the business over the period of examinership. The first 24 or 48 hours are always crucial to kind of instil some kind of confidence back into the business, so you can reach the second phase, which is looking for investment.”
He met with workers earlier this week and on Wednesday of next week he will meet representatives of trade unions, TEEU and SIPTU.
Mr McAteer sounded an optimistic note, saying that at least 75-80% of companies that enter examinership have a future and he said he would consider any proposals.
“I will listen and be open to any interested party that may come to the table. Part of my job is to evaluate the various investment proposals that are put forward and try to select the one that is best for the company and gives the most security to the company going forward.”
The matter is before the court again later this month and the examinership process can continue for up to 100 days.
“All the way through the process I have to form the opinion that the company has a reasonable prospect of survival. As long as I’m of that view, the process will continue to the maximum period or as soon as the company can be taken out of examinership,” he stated.