Arion Bank has had to write off close to ISK 2.5 billion ($20.6 million, €18.1 million) due to the bankruptcy of airline Primera Air, RÚV reports. Arion Bank released this information in a quarterly report of the third quarter of the year, which was released today.
The quarterly report states that Arion Bank's current credit risk connected to the aviation industry stands at ISK 4.3 billion ($35.5 million, €31.2 million) to a couple of customers. That amounts to close to 2.5% of the company's base net worth. The amount of 4.3 billion can be ascribed to loans and guarantees. Although the bank cannot disclose which airline operators are in business with the bank, it is known that one of Arion Bank's customers is the airline WOW Air.
Arion Bank profits in the third quarter of the year were ISK 1.1 billion ($9.1 million, €7.9 million), compared to ISK 0.1 billion ($827,000, €726,000) in the same quarter last year. The bank states that Primera Air's downfall affected profit and yield substantially. "The profits in the third quarter of the year was lower than projections, and the bankruptcy of Primer Air is the biggest factor, but the bank had to write off assets due to that. The basis of the bank's operations is still strong", part of the statement read.
Primera Air group became bankrupt in the beginning of October. Primera Air Group aircraft has flown from Iceland with an air operating certificate (AOC) from Latvia. The company flew for Icelandic travel agencies, while the flight attendants are largely from Latvia. Two Icelanders spearhead the group, president and owner Andri Már Ingólfsson, and CEO Hrafn Þorgeirsson. The airline was formed by 2009 by the Icelandic based Primera Travel Group.