CSA, the Czech flag carrier, has lost 105 million Czech Crown ($4.6 million) in the first nine months of the year. However, it is making sufficient progress in paying off its debts, and so it will remain in the process of business restructuring and will not be declared bankrupt.
CSA will escape bankruptcy for now
The insolvency administrator of CSA announced that he was satisfied with the financial state of the Czech flag carrier in a report seen by Simple Flying.
CSA will remain in the process of business restructuring and will not enter bankruptcy. This is because it generated sufficient revenue so far this year to pay off its liabilities in full and in time.
The Czech flag carrier generated sales revenue amounting to 522 million Czech Crown ($23.2 million) between January and September 2021.
Furthermore, the airline bolstered its liquidity in the same time period by selling what the report calls “surplus assets.” Most notably, CSA sold its emissions permits in what was the most lucrative surplus asset sale of this time period.
As a result, the insolvency administrator expressed the view that there were no grounds on which to turn the business restructuring into bankruptcy by closing down the business. This means that CSA will continue to carry passengers, at least in the short term.
Financial problems at CSA remain
Despite the good news about escaping bankruptcy, the financial standing of CSA remains poor, and this remains a cause for concern regarding its future.
CSA is in the process of business restructuring led by INSKOL, a Czech public trading company whose scope of business is to perform the duties of the insolvency administrator in accordance with national law.
The net profit generated between January and September 2021 remains a negative figure: the total loss recorded during these nine months was 112.8 million Czech Crown ($5.5 million).
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Further problems remain ahead
CSA was able to settle its receivables as scheduled, despite the negative financial result at the end of the year. The airline has also canceled its Airbus orders. Still, further problems for the airline remain ahead.
The solvency administrator did not conclusively state the level of support among CSA’s creditors for its ongoing proceedings at the airline. This is because the reorganization plan has still not been submitted.
CSA’s creditors, including ticket holders who have had their flights canceled and have not received a refund, are represented by a Creditors Committee. The Committee has met with the insolvency administrator as many as eight times in the third quarter of this year alone (between July and September 2021).
What do you think of the news that CSA will continue to operate while being in the process of business reorganization? Do you think the airline will live to be 100 years old later this decade? Let us know what you think of this story in the comments below.