Danish carrier Cimber Sterling is to refinance its fleet and apply for a Government-backed loan to reinforce its capital base.
The airline suffered heavy losses in its last financial year and the carrier says that increased competition and other factors have "intensified the requirements" regarding management of its cash resources.
Cimber Sterling says that its management has initiated a programme to refinance the fleet through a combination of sale, sale-leaseback and refinancing, "with a view to further strengthening" its capital base.
The carrier has a fleet of 28 aircraft comprising six Boeing 737s, 13 Bombardier CRJs and nine ATRs.
Thirteen aircraft are held on operating lease, one on finance lease, and the carrier owns the rest.
Cimber Sterling says its cash resources at the end of the 2009-10 financial year amounted to DKr60 million ($10 million).
Following the volcanic ash-related airspace closures in April, the Danish Government approved last month a regulation enabling travel companies to apply for guaranteed bank credits to cover losses.
Under the scheme the bank carries 20% of the risk with the remaining 80% guaranteed by a Danish fund for industrial growth.
"The group has decided to apply for such a loan," says Cimber Sterling. "The negotiations are still in progress. Management considers it most probable that the financing will be obtained."
Cimber Sterling says that the demands on the business since its initial public offering last year mean its cash resources are "currently lower than planned" and their improvement is a "high priority".
It has ruled out a dividend payment for the "coming years" but says the board believes its cash reserves for 2010-11 are "adequate".
Source: Air Transport Intelligence news
