The start of the end?
 

This from the Irish Independent...Connect Airways, the holding company behind Dublin-based Stobart Air, which operates the Aer Lingus Regional service, has fallen into administration in the UK, the Irish Independent has learned.

The move is linked to the recent collapse of Flybe. UK-based Flybe was also part of Connect Airways.

The administration means that accountancy firm EY now controls Connect and 49pc of Stobart Air. The other 51pc of Stobart Air is owned by its more than 400 staff.

Connect Airways is 30pc-owned by the listed UK Stobart Group. Virgin Travel Group, a subsidiary of Virgin Atlantic, also has a 30pc stake, while US firm Cyrus Equity Partners owns 40pc.

Yesterday, Stobart Group, whose CEO is Warwick Brady, warned investors that it’s evaluating how to manage liabilities it has to Stobart Air.



But with confirmation to the Irish Independent from EY that Connect is in administration, it means Stobart Group is now on the hook for guarantees given in relation to a number of aircraft leases.

A subsidiary of Stobart Group, Propius, engineered a sale and leaseback of eight ATR turborprop aircraft to German firm Goal in 2017. The aircraft are used for the Aer Lingus Regional service. Lease agreements under the deal total $15.4m a year and are for 10 years, it was reported at the time.

There’s an option to terminate the agreement in 2023, although the trading update issued by Stobart Group yesterday suggests that the guarantees could be significantly more material.

The current Aer Lingus Regional franchise agreement Stobart Air has with Aer Lingus ends in 2022.

Propius received $62.7m from the sale of the aircraft, according to reports when the deal was done. However, it’s unclear where those proceeds ultimately ended up following the creation of Connect Airways in 2019.
In a statement to the Irish Independent today, EY said:“Alan Hudson, Joanne Robinson, Simon Edel and Lucy Winterborne of EY’s Restructuring team were appointed joint administrators of Connect Airways Limited on March 10, 2020,” it said.

“Owned by a consortium of companies, Connect is a holding company that was set up in January 2019 to assist with the acquisition of the airline Flybe. Connect has no day-to-day trading operations itself.”
This is not great news for the owners of SEN. They have no cash available to them, no operating income due to CV, and now the administrators of Connect will be chasing them for the lease payments for the six ATRs totalling £150m over the next 10 years.

The Stobart share price has tanked meaning that they have little recourse to sensible debt options and the mortgaged Eddie Stobart shares are currently worthless. The leases and the ESL mortgage add up to £200m worth of liabilities.

I dont believe the airport is worth anything like the £800m quoted in the press; that now seems to have been an "accidently" leaked story to reassure investors and the Connect administrators. Airports sell for a multiple of EBITDA earnings and whilst the results are not yet out, I'd wager EBITDA is either zero or no more than £1-2m.

We could be witnessing the beginning of the end of Stobart's ownership of Southend Airport.

Not great news for Carlisle or Teesside, either.

Wwhy Teesside? Thought the Teesside taxpayers were bankrolling the airport?

Sorry pressed send before I finished! Modern technology!

The aviation and airport window will change forever after this sad episode.Thinking we will be down to 20 ish airports in the future to cover this island?

London area of course will be well covered..but the regionals will have big problems...?

Stobart Group have a 25% share (and it's national taxpayers - Teesside taxpayers are contributing as much as everybody else)

Quite possibly. But as I’ve said before. Stobart can’t roll up the runway and take it somewhere else.

I believe there will be an enormous pent up frustration and joy if the crisis does not go on too long. Just as aviation has been one of the hardest hit sectors right now, it will surely come come under pressure at some stage to meet demand with reduced capacity, possibility leading to a golden age for airlines and airports alike.

I guess right now it’s finding a way of staying in the game.

Whatever happens I’ll never forget. Without Stobart there would be nothing much worthy of discussion - let alone saving.

Very true. I think it is very sad that the company that started the Southend turnaround might not be there to reap the financial rewards of their hard work.

Too many airports are disappearing from the map nationally. I'd hate to see SEN turned into a mega residential development because the current owners ran out of cash. Hopefully the newer investors into Stobart Group (Tosca Fund Asset Management) have a long term interest in seeing the site remain as an airfield. They have been quietly buying up shares for some time now and have emerged as the biggest individual shareholder.

Maybe Tinkler was right?

A controversial individual, marmite definitely.

May I quote from Theodore Roosevelt - recently heard for the first time in many years on the Discovery’s channel Gold Rush.....

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.

Planning application for the new airport hotel has been withdrawn. Not really surprising at the minute.

From the grant of planning approval to breaking ground, build and fit out, to opening the doors will be in the order of 24 months if everything proceeded without problems. So withdrawing the application because of the current downturn due to CV could be seen as short-sighted. In 24 months time I predict air travel will be back to current levels. Even if Stobart Group are short of cash, getting the planning approval makes the airport more attractive to potential purchasers. I'm perplexed as to why they have withdrawn their application.

Looking online at Southend's planning portal, I am not sure that application 19/02066/BC4M has been withdrawn. Some revised plans were only submitted on the 11 March 2020 and it still shows a target decision date of Friday, 3 April 2020. Indeed the application also still appears on Rochford's online planning portal under reference 19/01028/FUL.

It would be very short sighted if they have withdrawn the application given that permission (if granted) will last for three years.

And where was your source of this information?

Discretionary spending will be hardest hit, which is bad news for air travel and Southend. Many people will take years to recover as will the economy.

Maybe, but in some areas we aren't back to 2007 levels yet...

With the government paying 80% of wages (capped at £2.5k/monthly) for those employess not able to work, with no travel costs for most employees, with no pubs, clubs, restaurants or leisure facilities open on which to spend your money, with non-food shops closed, I predict a huge spending splurge greater than Christmas once this is all over. I think a lot of people will be wanting to spend their cash on a foreign holiday.

Yes, it's a different story for the self-employed but the majority of the UK working population are being paid to stay at home and they have nothing to spend their dosh on. I can see an economic boom fuelled by a huge cash reserve being built up by people unable to get out and spend it right now.

asdf1234 It is really great that you are so optimistic. I guess we need many more people like you and less like me, as I just see recession, mass unemployment and possibly a great depression. Then there will be the bill for all that government help that will need to be paid off so taxes will have to rise and then another austerity programme to try and reduce government debt.

Whatever happens the airport will be safe but just less busy in my eyes and less people working there in the years to come.

The local ward Councillor and deputy mayor but what does he know eh, looks like he gave out the wrong info as application has now reverted to Status "Decision Pending"

As everywhere else, EZY and FR have now finished for the time being. FR officially until May, EZY limited from Easter although inevitably this will also get cancelled.

It’s not up on the Loganair website but Aberdeen has now finished and Carlisle ended on Monday despite the press release saying tomorrow. Quite possibly no one was booked or could travel anyway to Carlisle given hotels are closed.

Wizz have ceased Sibiu early, Vilnius is suspended until May, Bucharest apparently continues on Thursdays and Sundays although today’s is cancelled.

FlyOne did a couple of repatriation flights this week but they’re now also suspended until May.

Wideroe were due to start on Sunday but that has been postponed until June 1st.

So for now the entire SEN pax schedule is 1x daily to Derry and 2x weekly to Bucharest, if it runs.

Thank heavens for the cargo flights!!