Passengers are being left stranded as Cypriot Airline Cobalt Air has suspended operations.
They failed to reach a deal with a European investor by the last minute (Midnight on Wednesday) and thus had to ground all flights and release all staff.
Cobalt regrets to announce that it will be canceling all Flights as of 23:50 pm on October 17, 2018 due to indefinite suspension of Cobalt’s operations. As a result, future flights or services provided by Cobalt will be canceled and will no longer operate” – Statement from the airline
This follows on the heels of another European airline to declare bankruptcy this month.
The last plane to arrive under the Cobalt Air banner was a flight from Heathrow to Larnaca at 12:20 am. Passengers for future flights have been told not to show up to the airport and to seek remediation.
Now, this is not a bankruptcy yet, they have simply canceled all future work and planning on meeting shareholders on Thursday local time. Whether or not they will decide bankruptcy is the way to go or to simply sell assets and walk away, is another story. It is not known if they cannot pay debts, or if they have plenty of capital and simply was not making a profit.
The story of Cobalt Air
Cobalt flew to 23 destinations, out of the hub of Larnaca. Its fleet consists of six planes. They have two Airbus 319s (144 seats) and four Airbus 320s (156 seats). The firm also employees around 200 people.
Ironically, the airline stepped in to replace Cyprus Airlines, which went bankrupt in January 2015.
In May, the airline suddenly fired is CEO.
Cracks started to appear in early October when two of their planes were grounded when lease payments defaulted. These two planes were owned by an American leasing firm.
Then, they posted a loss for 2017. This proved that the airline was suffering cash flow problems and did not have enough cash, or its resources were tied up elsewhere.
Upon investigation, it seems the later. 49% of the company is owned by AJ Cyprus, who in turn is owned by the Chinese firm Joy Air. The Chinese government is very restrictive of Chinese firms from exporting capital out of China.
The company has $15 million EURs in their various accounts and thus will have enough money to refund passengers and pay out redundancy to employees.
What should passengers do who have booked on Cobalt Air?
If you are a passenger that is stranded due to this event (Such as on holiday and were to fly home on Cobalt, keep your ticket), you are entitled to a refund, but it may take a few months to process. The 2nd step is to get in touch with other airlines operating on those routes and ask for a compassionate price on their economy ticket. You will have to pay for a ticket, but generally, the other airlines are understanding and generally happy to offer a discount.
“Without having any legal obligation, we will, of course, ensure that we help the passengers.” – Vasiliki Anastasiadou, Transport Minister
The airline has indicated that on Thursday they will come up with an action plan to help their passengers.
More as this story develops.