Swedish cargo airline West Atlantic confirmed that it has suffered financially this year, largely as a result of high start-up costs caused by delayed deliveries of aircraft needed to fulfil its new Royal Mail contract.
In a statement on its website, the Gothenburg-headquartered airline said: "As a consequence, the company does not fulfill the “Maintenance Test” as per September 30, 2017 as stipulated in the terms and conditions of the company’s corporate bond loan".
It added the carrier's management and the board of directors "foresee no immediate consequences for operations or the company’s ability to pay its debtors".
The statement continued: "A turnaround and a return to profit is foreseen in Q4, not least because of an expected sale of aircraft, not required for operations, to be concluded. If the aircraft sales are not concluded during Q4, the company might once again have difficulties to fulfill the “Maintenance Test” as per December 31, 2017."
The Royal Mail agreement, signed late last year, represents the company´s largest-ever contract, with revenues of around SKr3bn expected over its five-year term.
The aircraft delays caused West Atlantic, whose West Atlantic Cargo Airlines is a specialist in mail and express air shipping, to sub-charter aircraft from other airlines, and incur double the cost for many items during the January–September period.
The losses were reported in the company’s first-quarter and second-quarter interim reports, and continued during the third quarter of this year.
West Atlantic confirmed that it will give more information in its third-quarter report, which will be published on November 30.
The West Atlantic Group is Europe’s largest provider of ground to air mail logistics, and either the "sole or at least a key" air network provider to several European national mail organisations.
West Atlantic Cargo Airlines’ current fleet consists of BAe ATP-F, Bombardier CRJ200PF and Boeing 737SF and 767SF aircraft.
It operates to approximately 45 scheduled destinations across Europe.