Stobart agrees to invest in Aer Arann
UK LISTED company Stobart yesterday said that it has agreed to make an investment in Aer Arann, a move that should allow the Irish airline to exit examinership.
This will give the company a “small stake” in Aer Arann in the form of a convertible preference share.
The British transport and logistics group said it would not get involved in the day-to-day management of the business.
It is understood that current owner, Galway businessman Pádraig Ó Céidigh will continue to be Aer Arann’s majority shareholder and the management team, led by chief executive Paul Schutz, will remain in place.
The total investment in Aer Arann could top €4 million, according to sources.
This would be used for working capital and to repay creditors of the airline.
Stobart said yesterday that it had signed a five-year operating agreement with Aer Arann to use London Southend Airport for flights starting in March 2011.
This will involve Stobart investing €2.5 million to incentivise and market Aer Arann’s operations from Southend.
Stobart owns Southend airport and is developing a rail connection to Liverpool Street station in London.
This will have a journey time of 50 minutes.
Stobart now wants to promote Southend as a feeder airport for London in a similar way to Stansted Airport which is used by Ryanair.
In its statement yesterday, Stobart said it expects Aer Arann, over time, to carry up to 300,000 passengers a year on routes to Southend.
It is also possible that Aer Arann could look to develop routes to continental Europe from Southend.
It is not clear which Irish airports Aer Arann would use for its flights to London Southend.
Stobart also wants to develop air freight services between Ireland and the UK with Aer Arann.
The High Court yesterday extended the examinership at Aer Arann until October 22nd.
This allows the examiner, Grant Thornton’s Michael McAteer, time to finalise a scheme of arrangement with creditors, who are owed about €18 million.
Aer Arann’s creditors include Allied Irish Banks, the Dublin Airport Authority, the Revenue Commissioners, and aircraft manufacturer ATR.
Stobart said its association with Aer Arann would strengthen its position in Ireland, where its turnover has grown to €40 million over the past two years. It operates a haulage and warehousing business here, with a facility in Dublin Port. Its website says there are 20,000 vehicle movements between Ireland and Britain each year.
Aer Arann was placed into examinership in August. It recorded losses of €6 million in the first seven months of this year and was in danger of running out of cash.