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Sep 09, 2022 14:47 EEST
September 9 (SeeNews) - Romanian low-cost carrier Blue Air said that it plans to resume flights on October 10 as it does not have the financial resources needed to carry out flights from next week.
"In the last 48 hours, Blue Air's executive management, board of directors and the shareholders found that ticket sales dropped significantly and payment processors blocked the amounts collected so far, so the company does not currently have the funds necessary to pay for fuel and other operational expenses for flights planned from September 12," Blue Air said in a press release.
All providers of essential flight services have made the provision of such services conditional on the payment of outstanding debts, Blue Air also said.
The air carrier added that it aims to reimburse all affected passengers and to pay all commercial partners the costs of the services provided in its favour during the time it has suspended flights.
Blue Air also said that by the time it resumes flights in October, two investors in London with whom it was in advanced negotiations should decide whether they will enter the company's shareholding or not.
Blue Air announced on Tuesday it is suspending all flights to and from Romania because the environment ministry blocked its accounts.
A day later, the ministry unblocked its accounts and the Environment Fund Administration rescheduled its 28 million lei ($5.7 million/ 5.76 million euro) debt in 12 monthly payments.
Blue Air also said at the time that its total debt amounts to 230 million euro ($227.8 million), or half of its annual revenues.
On Wednesday, the transport ministry said that the government is allocating 5 million lei to flag carrier Tarom to bring home Romanian citizens stranded abroad following Blue Air's decision.
On Tuesday, Blue Air said that calls by the president of Romania's consumer protection authority to the public to stop buying Blue Air tickets generated losses of over 5 million euro ($4.98 million) after tickets sales dropped. Also, Blue Air claims it has faced increasing pressure from key suppliers to pay the amounts necessary for daily operations in advance. The air carrier also said that discussions in London between with the two large investment firms were blocked following ANPC's statements.
Blue Air, the only air carrier in Romania with 100% domestic capital, started operations in December 2004. In July, Romania's consumer protection authority fined Blue Air with 2 million euro for cancelling over 11,000 flights over a 12-month period.
At the end of October, Ridgecrest, an AIM-listed cash shell, terminated negotiations on its proposed reverse takeover of Blue Air. The decision was a consequence of the airline's inability to raise the pre-reverse takeover funding, which was was the main condition of the non-binding heads of agreement between Ridgecrest and Blue Air's vendors announced in July, Ridgecrest said at the time.
In August 2020, the European Commission approved a 62 million euro Romanian loan guarantee to help Blue Air avoid bankruptcy due to the COVID-19 pandemic. In exchange, Blue Air committed at the time to submit a liquidation plan or carry out a comprehensive restructuring in order to become viable in the long-term.
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