Smartwings secures financing as part of ongoing restructuring

March 26, 2021
Smartwings airline signed a loan agreement with a syndicate of banks led by UniCredit Bank for a CZK 2 billion (approximately €76 million) loan with a maturity of six years, as part of the the Covid Plus program announced by the Czech government to mitigate the effects of the pandemic. The loan agreement has been concluded with four banks - UniCredit Bank, Komerční banka, Československá obchodní banka and Česká spořitelna. The Export Guarantee and Insurance Company (EGAP) is securing secure the loan. For this guarantee, Smartwings will pay state-owned EGAP a fee of almost CZK 200 million (approximately €764,000). A vital part of the transaction is a significant financial support from Czech shareholders, especially the Unimex Group, without which it would not be possible to draw the loan from EGAP. The restructuring measures adopted by Smartwings, including support from lessors, bring Smartwings additional approx. CZK 5 billion. These measures together with the EGAP loan exceed CZK 7 billion. This amount significantly exceeds Smartwings’ due payables and creates a sufficient financial reserve for a full restoration of air traffic.

As a result of the Covid-19 pandemic and subsequent measures by the government of the Czech Republic and other states, the Smartwings Group recorded an unprecedented drop in revenue. Until now, Smartwings has addressed the situation through a moratorium with the support of creditors. The moratorium ended on March 26, 2021. The Czech Republic is the only European country that does not have a support program for the air transport sector, which is among the industries most affected by the pandemic.

"This is a key milestone for Smartwings, after a year of battling the effects of the coronavirus pandemic. The financing deal, which concludes the moratorium process, will allow Smartwings to continue operating over the coming financial period. We appreciate the trust and professionalism that the banks and EGAP have shown us at this difficult time, especially UniCredit Bank, with which we have been cooperating for more than 20 years," says Jiří Šimáně, Chairman of the Board of Directors of Smartwings.

We are glad to be close to our clients and to be able to support them during these challenging times, thus allowing the restart of the Czech economy and, as regards Smartwings, the operation of the largest Czech airline provider,” said Jakub Dusílek, Chairman of the Board of Directors and CEO of UniCredit Bank.

UniCredit Bank is the main arranger in this transaction and one of the lenders.

Smartwings is working with EY as financial adviser and Dentons as legal adviser on the restructuring process.

Smartwings received significant support from all leasing companies and other companies with which it cooperates, including Lufthansa Technik. The lessors have significantly supported the largest Czech air carrier since the onset of the pandemic.

Smartwings is fully prepared for the upcoming summer season, when it plans to operate flights not only from the Czech Republic, but also from Poland, France, Hungary, Slovakia and the Canary Islands. The Smartwings fleet now numbers 42 aircraft.

Smartwings has signed contracts worth tens of billions CZK with travel agencies in the Czech Republic and abroad for the provision of air transport services.

Until the coronavirus crisis, Smartwings was a profitable company and one of the fastest growing airlines in Central Europe. As a result of the COVID-19 pandemic and government restrictions, Smartwings laid off 600 employees and implemented a number of restructuring measures.

Smartwings is one of the most important companies in the charter flight market in Central Europe. In addition to the Czech Republic, where it operates regular flights to dozens of destinations under the Smartwings brand, it operates in Poland, France, Hungary, Slovakia and the Canary Islands. In addition to scheduled and charter flights, it provides special flights for various major organizations and sports clubs, and has long been involved in arranging UN and NATO-funded flights for the armies of the Scandinavian countries.

Smartwings is also supporting the reorganization process of its subsidiary, Czech Airlines, which was not granted assistance from the Covid Plus program.