UK logistics giant steps in with €2.5m Aer Arann plan
Published 12/10/2010 | 05:00
UK logistics group Stobart will invest €2.5m to support the launch of Aer Arann flights to Southend Airport and will take a small stake in the troubled airline, the company confirmed yesterday.
The announcement came as the High Court has extended until Friday week its examinership protection for Aer Arann after a judge was told an investor had been secured to ensure the airline's survival as a going concern.
The Irish Independent understands that Aer Arann chairman Padraig O'Ceidigh will retain a majority stake in the airline once the examinership process has been completed following a fresh injection of equity from the Galway man. It is believed Stobart will also have representation on the Aer Arann board.
Stobart and Aer Arann have signed a five-year deal that aims to generate 300,000 passengers a year for London Southend Airport, which is owned by the UK-listed transport group. The first flights will begin next March.
"Although the agreement provides Stobart with a small stake in the form of a convertible preference share in Aer Arann, it does not signal that we are getting into the airline business and we would not be involved in the day-to-day management of Aer Arann," said Stobart chief executive Andrew Tinkler yesterday.
He said Aer Arann had a skilled management team led by Padraig O'Ceidigh that would run the business.
Mr Tinkler said the deal was a "pragmatic" one with advantages for Stobart. "Firstly it will guarantee business and volume that will underpin acceleration of our development plans for London Southend Airport.
"Secondly it will further develop the Stobart business and brand in Ireland. Thirdly the alignment with Aer Arann provides future opportunities for the growing demand for air freight from our customers," he explained.
The deal is conditional on Aer Arann successfully existing through examinership, which Stobart believes will be formally achieved before the end of this month.
Aer Arann interim examiner, Michael McAteer of accountancy firm Grant Thornton, was appointed last August to the airline after the court heard it could not pay its debts due to a number of factors, including the global economic downturn and flight disruption from the volcanic ash cloud problem earlier this year.
It posted combined losses of some €18.5m for the last two-and-a-half years.
An independent accountant's report revealed the company that operates the airline, Comhfhorbairt Gallimh, has a reasonable prospect of survival if certain steps are taken.
Yesterday, Rossa Fanning BL, for the examiner, told Ms Justice Mary Finlay Geoghegan that a signed investment agreement was now ready and that Mr McAteer was confident, subject to requisite votes of the company, that this would be sufficient to ensure the firm's survival.
That agreement and a scheme of survival should be in place by tomorrow, subject to the resolution of a minor issue, counsel said.