Creditors uneasy after failure of Zoom

With the collapse last week of no-frills carrier Zoom Airlines, the spectre of more failures has risen once again, according to a report in The Financial Times.

After the airline’s planes were grounded on 28 August, creditors seized two of the carrier’s leased aircraft, citing alleged non-payment of leasing fees, and causing it to go swiftly into administration.

Although Zoom is certainly not the first airline to find itself in difficult circumstances in the recent economic climate, analysts are warning that its failure could be the start of a new wave of bankruptcies among financially-troubled airlines.

They also suggest that most of the other recent failures were quite different in that they largely affected the niche business class market.

Eos, MAXJet and Silverjet all collapsed during the past year, but the abrupt failure last week of a mainstream, commercial carrier is engendering fear among many industry observers.

In the words of one industry expert: “Airline creditors are twitchy right now.”

Chris Boresjo, a partner in the asset finance and leasing firm Simmons & Simmons, explained: “It could be a race to get to the aircraft, since planes are subject to some chunky liens (legal claims).”

His suggestion is a reflection of what occurred last week in the drama that unfolded rapidly, and saw UK airports operator BAA detain Zoom planes at both Gatwick and Glasgow.

A few short hours later, a third departure had been cancelled – this one from Cardiff Airport. By 7:00 pm, Zoom announced that all its planes were grounded and that it had ceased its operations.

www.flyzoom.com