The firm said it needs a capital injection after posting a SEK81.8 million (USD9.7 million) net loss in 2016 and a further SEK53.2 million net loss (USD6.3 million) in 1H2017. While the earnings for 3Q2017 have yet to be released, West Atlantic concedes its losses have continued. This has resulted in the company failing to meet the conditions of a corporate bond loan at the end of September.
The group’s board foresees no immediate consequences for operations or the airline’s ability to pay its debtors.
The losses have been caused by high start-up costs related to the SEK3 billion (USD356 million) post carriage contract with the UK’s Royal Mail. The five-year contract has commenced in January 2017 but had a rocky start due to delayed deliveries of B737-400(F)s to West Atlantic. The carrier had to sub-charter aircraft from other operators at a higher cost for this period.
West Atlantic expects turnaround and return to profitability in Q4 due to an expected sale of redundant aircraft but admits that if this sale does not occur, it might fail the corporate bond loan maintenance test again.
The Swedish carrier is a launch customer for the B737-800(BCF) converted freighter aircraft, with the first delivery tentatively scheduled for February 2018. All four aircraft will be leased from GECAS.
West Atlantic Sweden (SWN, Gothenburg Landvetter) currently operates 23 BAe ATP(F)s with a further 9 stored for parts, two CRJ-200(F)s and three B767-200(SF)s, while its British subsidiary Atlantic Airlines (UK) (NPT, Coventry) operates 10 B737-400(F)s and six B737-300(F)s. The contract with Royal Mail is served by nine B737 freighters and three BAe ATPs. Other customers of the airline group include Posten Norway, La Poste, DHL Express and TNT Express.