Airbus Seeks Compensation For Czech Airlines Unpaid A220 & A321XLR Orders

Czech Airlines (CSA), the flag carrier of the Czech Republic that is in bankruptcy proceedings, has a new creditor on its insolvency register: Airbus. Airbus wants almost CZK 17 billion ($815 million) for four A220-300 and three A321XLR aircraft that Czech Airlines ordered in 2019.

Czech Airlines was due to receive three A321XLRs. Photo: Airbus

Airbus is seeking financial compensation of CZK 17 billion

The flag carrier of the Czech Republic, Czech Airlines (CSA), could soon be facing a financial burden that it cannot possibly overcome.

Airbus is seeking as much as CZK 17 billion ($815 million) from the airline as part of the ongoing bankruptcy proceedings. The insolvency administrator, Michael Šefčík, is now assessing this claim, along with over 5,000 other ones.

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The $815 million claim is for the unpaid order of seven aircraft that CSA made in 2019, but never ended up paying for. The seven aircraft are four A220-300s and three A321XLRs.

The A220s should already have arrived at the end of 2020, but the ongoing pandemic came as such a severe blow to CSA that the airline declared bankruptcy last year.

The Smartwings Group, the owner of Czech Airlines, has not received financial assistance from the Czech government, unlike the flag carriers of other countries worldwide.

Airbus Seeks Compensation For Czech Airlines Unpaid A220 & A321XLR Orders
Czech Airlines also had four A220s on order. Photo: Airbus

What is Airbus claiming for?

In documents supplied as part of the bankruptcy proceedings for review by the insolvency administrator, and as seen by E15, Airbus is claiming CZK 8.5 billion ($407 million) of unconditional receivables from Czech Airlines.

This is exactly half of the total amount of $815 million that Airbus is claiming for. The other half is contingent receivables, so funds that Airbus wants Czech Airlines to pay if it withdraws from the purchase agreements made in 2019. The amount includes interest payments and arrears fees.

Given that it is certain that Czech Airlines will not be honoring the original purchase agreements since it has no financial means to do so, Airbus is really claiming for $815 million. This amount vastly outstrips the total value of CSA’s assets.

Czech Airlines already had a CZK 1.8 billion ($85 million) debt when it was placed in bankruptcy proceedings. If Airbus’ claim is approved, even partially, then Czech Airlines is almost certainly not going to succeed in its attempt to reorganize itself, and will definitely be shut down.

Czech Airlines
Czech Airlines is one of the oldest airlines in the world. Photo: Getty Images

What order did CSA place in 2019 with Airbus?

In October 2019, when it was still a profitable airline, Czech Airlines ordered four Airbus A220-300 aircraft and simultaneously converted its order for three A320neo aircraft to three A321XLRs.

Petr Kudela, the Chairman of the Board of Czech Airlines, commented on the order at the time by saying:

“The A220 and A321XLR fit well with our long-term business strategy in terms of network expansion. These aircraft will definitely give Czech Airlines a competitive advantage, and will increase the capacity of our regular flights.”

But these seven aircraft never arrived. Czech Airlines, one of the world’s oldest airlines, may be destined for history books without ever having received them.

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