Utair Airlines has released consolidated financial statements of the UTair Group in accordance with International Financial Reporting Standards (IFRS). As noted by the airline's press service, Utair may cease operations due to accumulated debts.
"The Group's aircraft operator, Utair, was critically impacted by unfavorable market factors. In order to ensure uninterrupted passenger air transportation, the Group decided to suspend payments on seven-year loans and borrowings in December 2018. The effect of the 2015 restructuring was written off as a one-time expense, so the net loss amounted to RUB 21.9 billion," the statement said.
The company has been audited by the British audit and consulting company Ernst & Young. The company believes that the audit evidence obtained is sufficient and appropriate to serve as a basis for our opinion.
In addition, the company draws attention to Note 2 to the consolidated financial statements, which indicates that in 2018 the Group incurred a net loss of RUB 21,999,111 thousand, and as of December 31, 2018, the Group's current liabilities exceed its current assets by RUB 74,939,110 thousand, and net assets have a negative value of RUB 30,581,807 thousand.
In addition, in 2018 the Group failed to comply with certain covenants under its loan agreements and has significant indebtedness that it will not be able to repay without refinancing or restructuring. These events and conditions, along with other matters discussed in Note 2 to the consolidated financial statements, indicate the existence of a material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern.
In addition, as at 31 December 2018, the Group defaulted on interest payments on certain 7-year loans. All other loans and borrowings received by the Group contain a cross-default clause. Given the Group’s lack of an unconditional right to defer the performance of obligations under loan agreements and borrowings with a maturity of more than 12 months after the reporting date, the debt on such loans and borrowings in the amount of RUB 67,836,753 thousand was classified as current as at 31 December 2018, and the Group recognized finance costs in the amount of RUB 23,523,700 thousand in the statement of comprehensive income due to the change in the classification of loans and borrowings.
The Group is currently undergoing a comprehensive debt restructuring, which it plans to complete in 2019. As a result of the restructuring, the structure and terms of debt repayment will change, which will have a positive impact on the Group's financial performance.
Let us recall that at the end of December last year, the airline defaulted on one of the syndicated loans, failing to transfer about 1 billion rubles to creditors. In addition, the carrier asked the syndicate, which includes Sberbank, to change the terms of repayment of the loan of 18.9 billion rubles, which was issued in 2015.
A little later, Utair asked its creditor banks to write off debts totaling more than 30 billion rubles. As Vedomosti reported, citing its sources, in case of refusal, the carrier may face bankruptcy. At the same time, according to experts interviewed by TRN, such a negative scenario is unlikely to affect the tourism business.
Then, on March 26, the Arbitration Court of the Khanty-Mansiysk Autonomous Okrug accepted the claim of the financial company Flash Light Capital for the bankruptcy of the airline Utair. This follows from the card index of arbitration cases.
Source: trn-news.ru