BOSSES at Chinese-owned Thompson Aero Seating say they fear for the firm's future amid a global supply chain crisis following the Covid-enforced grounding of most of the world’s passenger aircraft.
The company, which designs and manufactures premium business class seats for commercial airlines at sites in Portadown, Carn and Banbridge, laid off 350 contract workers at the start of the pandemic in March, and in June then revealed that up to 500 permanent staff could be made redundant.
And in its latest set of published accounts - during which annual losses more than quintupled from £23 million to £121 million - directors at the China Aviation Industry Corporation-owned subsidiary paint what may be seen as a doomsday scenario.
In a statement accompanying the financials, they say: “There is a material uncertainty that may cast significant doubt on the company's ability to continue as a going concern and to continue realising its assets and discharging its liabilities in the normal course of business.”
All this comes as ADS, the body representing the UK’s aerospace sector, lengthened the timeline for an aviation activity recovery to at least 2024.
And unions estimate that 125,000 jobs could at risk in the aviation industry, of which nearly half are in the supply chain.
Despite those mammoth trading losses in its 2019 calendar year, Thompson Aero Seating actually increased its sales from £141m to £181m, while its workforce swelled from 788 to 1,188.
But during the year it went from having reserves of more than £25 million to an equity liability of £96 million, while it had £54 million less on its order-book.
And forward-looking statements by management reflect a company effectively on life support.
Directors said that, when signing off the 2019 accounts just last month, "there is a reasonable expectation that the company has adequate resources to continue in operational existence for at least the next 12 months", but add that revenue, profitability and cash flow have been "significantly lower" than pre-Covid.
They add: "The company does not have any credit facilities and has been supported by its shareholder through this period, which has provided loans of £36 million to provide additional liquidity."
Management has looked at, and stress-tested, a forecast model for the business up to 2024, taking into account the cost savings and efficiency measures (including redundancies), and this indicates that "further shareholder support is required".
They add: "The company's shareholder needs to obtain funding to provide this support, and is currently in talks with potential lenders and its parent Aviation Industry Corporation of China.
"At the date these financial statements were approved {two weeks ago} that funding was not in place."
In its relatively short lifespan from the early 2000s, Thompson has grown from a modest supplier of full flat horizontal beds to one of the world's top manufacturers of business and first class aircraft seating.
Its worldwide customer base features top airlines like Delta, Lufthansa and Singapore Airlines, and its seats are installed on all major aircraft types from Airbus and Boeing including the A380 and Boeing B787 Dreamliner.
