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Hanjin's bankruptcy drags down Danaos' Q2 profits by 55pc

GREEK containership owner Danaos Corp posted a second quarter net income of US$20.2 million, representing a decline of 54.7 per cent compared to the same period a year ago. The weaker performance was blamed on Hanjin Shipping's bankruptcy.

Second quarter operating revenues decreased 16.9 per cent year on year to $113.9 million, mainly due to the loss of revenues from cancelled charters with Hanjin for eight vessels. These vessels were re-chartered at lower rates, and in some cases, underwent off hire time in the 2017 period, reported American Shipper.

Danaos "is in breach of certain financial covenants as a result of the Hanjin bankruptcy," Danaos CEO Dr John Coustas was quoted as saying. "We are currently engaged in discussions with our lenders regarding refinancing substantially all of our debt maturing in 2018.

"These discussions encompass potential amendments to the associated financial covenants that have been breached," he said.

"In the meantime, we continue to generate positive cash flows from our operations and currently are in a position to service all our operational obligations as well as all scheduled principal amortisation and interest payments under the original terms of our debt agreements."

Looking ahead, Mr Coustas said that consolidation in the container shipping industry along with legacy newbuilding orders for large vessels still to be delivered is anticipated to maintain pressure on charter rates for a considerable amount of time.

"Danaos continues to have low near-term exposure to the weak spot market with charter coverage of 87 per cent for the next 12 months based on current operating revenues and 66 per cent in terms of contracted operating days," he added.