The shock waves from the collapse of veteran UK tourism group Thomas Cook, which also holds an airline, has reached the Tel Aviv Stock Exchange (TASE). Knafaim Holdings Ltd. (TASE: KNFM) unit Global Knafaim Leasing Ltd. (TASE: GKL), which purchases, leases, and sells airplanes, reported that it had leased an Airbus A330-300 airplane in an agreement valid until the third quarter of 2025. The balance of the future lease fees to which Global Knafaim Leasing is entitled is over $9 million.
Deposits held by Global Knafaim Leasing as security for the amount have already been deducted from this sum. Global Knafaim Leasing's share of the lease agreement, which it contracted together a partner holding rights in the airplane's engines, is in the body of the plane. According to the figures reported by Global Knafaim Leasing, the remaining depreciated cost of the body of the plane involved is $9 million. The company said that it had no debt to any financing concern for the airplane.
Global Knafaim Leasing's share price responded to the report published at noon with a 5% drop in a small turnover, after the share had risen 33% this year, putting the company's market cap at NIS 220 million. Despite Global Knafaim Leasing's good year in 2019, its share price has declined almost 40% since the company's IPO in July 2017. The controlling shareholders in Global Knafaim Leasing are Tamar and David Borowitz through Knafaim Holdings, which also holds a controlling interest in El Al Israel Airlines Ltd. (TASE: ELAL).
Global Knafaim Leasing's report on the matter came after it was learned that the Thomas Cook group had filed for bankruptcy in a UK court, which granted the petition and appointed a special manager.
Global Knafaim Leasing said that Thomas Cook's petition had been filed "after the failure of talks with its shareholders and principal creditors for a change in the company's capital structure." Global Knafaim Leasing emphasized, "As of this date, it is too early to say what effect the bankruptcy proceedings will have on the lessor's activity," and that it was considering together with its partner in the plane "the proceedings and the options available to it."
Global Knafaim Leasing's lease fees declined 33% to $14.5 million in the first half of 2019, mainly due to the effect of the sale of several Boeing and Airbus airliners in 2018 and early 2019. The company greatly reduced its operating expenses, however, and also had one-time revenue from a sale early in the year and lower financing expenses. As a result, its net profit was up 26% to $5.5 million in the first half of the year.
In recent days, Global Knafaim Leasing reported early and full repayment of a $33 million loan from an Israeli bank for the purchase of a an Airbus A330-300 airplane, the same model as the one leased to Thomas Cook. The plane will be purchased in early October.
Published by Globes, Israel business news - en.globes.co.il - on September 23, 2019
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