Airwork has identified six B757 aircraft leased to Russian counterparties, which are "affected by the unprecedented event of war in Europe". Photo / Supplied
Airwork has identified six B757 aircraft leased to Russian counterparties, which are "affected by the unprecedented event of war in Europe". Photo / Supplied
Auckland-based Airwork, which was bought by a Chinese conglomerate five years ago for $270 million, has taken a big financial hit because of the Covid pandemic and now has aircraft stranded in Russia due to sanctions relating to the Ukraine war.
The company, which maintains planes and helicopters andprovides charter services, has reported a net loss of $4.2m for the year to December 2021 – compared to a $32.7m profit for the previous 12 months.
While total revenue climbed to $258.36m from $210.83m in 2020, Airwork's bottom line was hit by impairment expenses largely relating to Greek-based Olympus Airways.
Airwork's relationship with Olympus involved aircraft leases and a convertible note investment, which has been written off after a decision in early December to terminate the aircraft lease agreement.
China's Zhejiang Rifa acquired the previously NZX-listed Airwork in 2017 having earlier snapped up 75 per cent of the business in a partial takeover. Rifa is controlled by Jie Wu, whose family's net worth was valued by Forbes at US$1.12 billion ($1.8b) in 2018.
Airwork's accounts, filed with the New Zealand Companies Office, show abnormal items totaling $26.85m. This included impairments of $15.63m on Olympus trade receivables, $6.95m on the convertible note and $3.07m of additional costs in relation to Olympus.
The company also accounted for a $3.64m impairment on helicopter investments.
"2021 has been a turbulent year for Airwork," the company said in notes to the accounts. Olympus was materially affected by the ongoing impacts of Covid-19, it said.
"[This] ultimately caused it to fail to meet the operational expectations and the outstanding receivables have continued to increase despite Airwork working actively to support the customer to overcome their financial difficulties."
Airwork's board decided on December 10 to terminate the relationship, resulting in the impairment of receivables and associated costs of aircraft recovery, it said.
The company also said its helicopter division had a difficult second half of the financial year because of the prolonged lockdown in New Zealand.
Trouble in Europe
Airwork is also exposed to the war in Ukraine, which it noted as a subsequent event to the 2021 financial year.
The company said it has identified six B757 aircraft leased to Russian counterparties, which are "affected by the unprecedented event of war in Europe".
Five of those aircraft are in Russia and one is "positioned elsewhere", the company said.
"Airwork is continuously obtaining and updating legal advice and other appropriate commercial processes as the situation develops and following procedures to ensure the assets are either secured and/or remain in compliance with any sanction measures, including full disclosure to any interested parties."
Russia has reportedly seized aircraft owned by various companies and individuals in response to sanctions triggered by the war in Ukraine.
Airwork did not provide further details as to the status of its six aircraft but said it was not yet aware of any losses as a result of the issue.
Rifa bought 75 per cent of Airwork for $203m in 2016. It then bought the remaining shares in September 2017 for $68m.
However, the Chinese firm has had to inject more equity into the business, including about $200m a year after purchase.
The latest accounts show Airwork has obtained further funding from its shareholder in the form of subordinated debt of US$28m, which was made available in March 2022.
