If 2016 ended with more questions than answers as to how Brexit would take shape, 2017 began with at least a little more clarity.
The European Court of Justice (the "ECJ") has ruled that, in certain circumstances, when a subsidiary company is wound up, its employees will transfer automatically to its holding company.
What happened?
Air Atlantic SA ("AIA") was a Portuguese company operating in the aviation sector. It had been providing charter (or non-schedule) flight services since 1985.
On 19 February 1993, AIA was wound up. During the winding-up, several of AIA's employees were dismissed as part of a collective redundancy.
The Supreme Court (unanimously dismissing the appeal in Trustees of Olympic Airlines SA Pension &Life Assurance Scheme v Olympic Airlines SA) has held that “economic activity” is central to the definition of “establishment” in the Insolvency Regulation1.
The regulatory amendments drawn up by the Secretary of State for Work and Pensions following the outcome in Trustees of Olympic Airlines SA Pension &Life Assurance Scheme v Olympic Airlines SA have been drafted narrowly and may end up protecting no one other than the beneficiaries of the Olympic Airlines pension scheme.
The issue
En décembre 2013, Chypre a notifié à la Commission européenne une aide de 102,9 millions EUR pour la restructuration de la compagnie aérienne nationale Cyprus Airways. Le plan de restructuration vise à rétablir la situation financière de l’entreprise qui rencontre des difficultés depuis de nombreuses années.
Summary
The Court of Appeal’s judgment in The Trustees of the Olympic Airlines SA Pension & Life Insurance Scheme v Olympic Airlines SA [2013] EWCA Civ 643 has clarified what is required to fall within the definition of an ‘establishment’ for the purposes of the EC Insolvency Regulation (the Insolvency Regulation).
The European Commission has proposed measures to protect independent travellers from financial loss if their airline collapses. Current rules provide tourists who book package holidays with protection covering brochure information, rights to cancel without penalty and airline or tour operator insolvency. However, 23% of travellers in the EU now book independently.
The European Commission has approved the plan by the Italian authorities to sell the assets of the airline Alitalia, which had entered into financial difficulties, under a special insolvency procedure. The Commission concluded that the sale of the assets would not constitute a subsidy prohibited under EU State aid rules provided the assets are sold at market value and other conditions have been satisfied. An independent trustee has been appointed to oversee the sale by the administrator assigned under the special insolvency procedure.
By Julia Wittig, Firm: Kliemt.HR Lawyers
The German Federal Labour Court has ruled that cabin crew of the insolvent Air Berlin were not entitled to compensation for the loss of their jobs.
Amid an increasingly volatile aviation industry pervaded by headline-grabbing failures (think Monarch Airlines and Air Berlin), lessors’ and financiers’ need for effective mechanisms to recover their assets has also grown. While repossessing aircraft is never a desired first option – after all, this does stem the flow of revenues derived from the aircraft’s operation – regrettably it must be resorted to when negotiations with the airline fail.