Smartwings in financial peril over Boeing 737 MAX grounding

by   CIJ iDesk I
2019-06-18   09:24
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The Czech Republic's biggest airline, Smartwings, has been thrown into turmoil following the refusal of its main shareholder to agree to raise its capital by CZK 700m. According to E15, China International Group Corporation didn't even show up to a shareholders meeting that had been scheduled in order to vote on the matter. CIGC holds 49.92 percent of the shares in Smartwings. "It's unclear why the Chinese shareholder has refused the capital raise, if there are objective reasons for it that are not the company's faule," E15 quotes M&T analyst Milan Vaníček as saying. "Either the Chinese don't have the funds for it or they don't want to. In that case, it doesn't make sense why they bought the company." The Boeing 737 MAX is the workhorse of the Smartwings fleet of planes. Its grounding until the first quarter of 2020 has thrown numerous carriers into chaos. The Czech company Unimex, which owns the remainder of the shares in Smartwings, is in favor of the capital raise. The company may be forced to borrow on the capital markets, but E15 writes that with an already fragile cash position, the terms it's able to secure will be significantly worse thanks to the current situation.