In late 2017 the UK Government spent £60 million of taxpayers' money repatriating over 110,000 Monarch Airlines passengers stranded overseas.
The Airline Insolvency Review was created to "consider both repatriation and refund protection to identify the market reforms necessary to ensure passengers are protected".
UK taxpayers paid over £60 million to repatriate around 110,000 passengers stranded abroad following the failure of Monarch in October 2017. The UK Government commissioned the Airline Insolvency Review to assess the existing protections available to passengers in the event of a future airline insolvency and make recommendations to ensure taxpayers no longer foot the repatriation bill. The review has now published its final report. It remains to be seen which of the recommendations (if any) will be implemented but some of them have the potential for far reaching changes in the sector.
- Introduction
On 9 May 2019 the Airline Insolvency Review (the AIR), chaired by Peter Bucks, published its Final Report on passenger protections in the context of airline insolvencies, having been commissioned by the Chancellor of the Exchequer in November 2017 following the high-profile collapse of Monarch Airlines.
In October 2009 the Greek airline, Olympic Airlines SA ("OA"), entered "special liquidation" in Greece after the European Commission ordered it to repay illegal state aid from the Greek Government. OA employed about 27 employees in the UK, who participated in an occupational pension scheme. In June 2010 OA's liquidator informed the scheme's trustees that the UK employees' employment would be terminated and that pension contributions would cease from July 2010.
Introduction
Airport and air navigation charges
EU Emissions Trading Scheme EU Emissions Trading Scheme
Comment
Recent European airline bankruptcies have highlighted the need to take care when formulating aircraft repossession and recovery strategies.
In its judgment of 11 October 2011, the English Court of Appeal analysed the terms of an aircraft purchase agreement (the “Agreement”) entered into by Gesner and the aircraft manufacturer Bombardier. The Agreement was in Bombardier’s standard terms. Gesner, the purchaser, sought to terminate the agreement on the grounds that Bombardier had delayed in fulfilling its contractual obligations. Thereafter, Bombardier sought to retain certain monies as liquidated damages upon termination of the Agreement. Gesner challenged this retention.
In the case of Global Knafaim Leasing Ltd & Anor v The Civil Aviation Authority & Ors [2010] EWHC 1348 (Admin), the UK’s High Court held that the Civil Aviation Authority (CAA) and BAA Ltd. (BAA) were entitled to a statutory lien of a lessor’s aircraft, to ensure a lessor pays all the outstanding route and aircraft charges of an insolvent operator and its fleet of aircraft, and not just those related to the aircraft of the lessor.
R (on the application of Global Knafaim Leasing Ltd and another) v. Civil Aviation Authority and another
As the impact of COVID-19 is felt across the globe, many airlines have grounded their fleet, ceased operating flights, and are potentially in breach of any financial covenants that they may have in their debt or lease documents, if not already in technical insolvency.
If an airline does go into insolvency, what should banks and lessors do to protect their assets? What issues, practical and legal, should they be aware of?
The Warning Signs