Ash cloud hit airline hard after a gradual descent
Published 27/08/2010 | 05:00
WHEN airlines go bust, there's usually a checklist.
Nasty credit card companies suddenly refusing to release fares until passengers have taken their journeys. Oil prices spiking to high heaven. Planes flying half-empty as passengers bail out. And balance-sheet black holes so big you'd need to win the Euromillions to even make a dent.
When Aer Arann piled into the courts to appeal for protection from its creditors, though, those looking to make their marks on the checklist were left disappointed.
Aer Arann wasn't driven to the brink by credit card companies suddenly turning the screws and withholding cash, as has happened to so many other airlines.
As a tiny airline, in the global sense, Aer Arann never enjoyed the kind of upfront credit card payments the likes of Ryanair are bestowed with.
The credit card companies might have tightened up a bit of late, but they were never in a position to do anything truly seismic.
Oil prices don't explain the airline's plight either, since Aer Arann survived the crazy oil price spikes of 2008.
Empty planes doesn't seem to have been the problem either. In a statement, Aer Arann last night said it had "been trading well" in the first quarter of the year, and the airline's code-share with Aer Lingus was also reported to been doing a healthy business.
As for the balance sheet, Aer Arann says its shareholders' deficit is just €13m, a tiny amount in an industry where aspiring millionaires must begin life as billionaires and then buy an airline.
In one of the most fast-paced industries in the world, Aer Arann's undoing seems to have been unnervingly gradual.
The airline lost €6m in 2008 and another €6m in 2009, the court was told last night. A good start to 2010 was swiftly followed by the ash cloud, which crippled forward bookings and triggered massive "duty of care" payments to stranded passengers.
Having lost €12m in the previous two years, the privately-owned Aer Arann was running on empty by the time the latest crisis hit.
Losses of €6m in the first seven months of the year were too much to stomach.
Board meetings were held, options were discussed, and a proactive jump into examinership judged the best option. The mood in the camp remains upbeat.
The final part of the checklist has not been ticked, they stress. Aer Arann has not gone bust.
And its 320 staff are determined to spend the coming months fighting an uphill battle to ensure that it doesn't.