There had been a breakdown in communication at senior level between the two airlines
Aer Lingus was caught unawares by Stobart Air’s collapse last Friday as there had been a breakdown in communications at a senior level between the two carriers, the Irish Independent understands.
Stobart Air, which was headed by managing director Andy Jolly, had operated the Aer Lingus Regional service on a franchise basis.
There has been a political storm caused by the collapse, with the Government in the firing line over its handling of Ireland’s aviation sector during the pandemic.
It’s believed that executives at Stobart Air had not received replies from Aer Lingus to queries and requests in recent weeks, and that Aer Lingus was not aware of the impending liquidation of the Dublin-based carrier.
Aer Lingus has denied that there was no high-level contact with Stobart Air, however.
“Aer Lingus has been in regular and detailed contact with Stobart Air and its parent company over recent weeks as they sought to conclude a transaction for the sale of Stobart Air,” said a spokesperson for the airline.
In April, Stobart Air’s owner, UK-based listed firm Esken, secured agreement to sell the Dublin-based airline to a start-up Isle of Man firm called Ettyl.
That deal was due to conclude by early May. For it to go ahead, change of control consent was required from Aer Lingus, whose chief executive is Lynne Embleton.
However, it’s understood that despite Stobart Air having sought approval from Aer Lingus for that change of control, the process had stalled with no flow of communication between the pair.
Regardless, Ettyl was unable to complete the acquisition of Stobart Air, with its financing avenue having evaporated. Esken terminated the sale contracts last week.
“In the absence of any alternative purchasers or sources of funding for the Stobart Air business within the required timescale, Esken has advised the board of Stobart Air that it will not continue to provide financial support to the business going forward,” said Esken in a statement at the weekend.
“As a result of this the board of Stobart Air has terminated its franchise agreement with Aer Lingus, will cease trading and is taking steps to appoint a liquidator,” it added.
Esken chairman David Shearer said it was “disappointing” that the group had not been able to complete the sale of Stobart Air despite “tireless efforts” of group management and the team at Stobart Air.
“I am acutely aware of the impact this will have on the staff, customers and the businesses associated with the airline, but the continuing impact of the pandemic in terms of lockdown and limited travel has prevented us from achieving a better outcome,” he said.
Stobart Air employed close to 500 people.
Among the routes it operated were two taxpayer-funded public service obligation routes (PSO) from Dublin to Donegal and Kerry. But aircraft on those routes had been flying empty or mostly empty since the pandemic began. However, Stobart Air continued to receive funding for operating those routes during the crisis. The subvention amounts to about €7m a year.