Aer Lingus CEO denies breach of contract at Belfast Airport
Airline executive says it met terms of contract when operation became unsustainable
Stephen Kavanagh, the airline’s chief executive, insisted it honoured a pricing arrangement to pay for having a base at Aldergrove and only left when the operation became unsustainable.
Belfast Internaiton (BIA) is suing Aer Lingus for £20 million in damages over the switch to George Best Belfast City Airport in 2012. Proceedings centre on a dispute over the terms of a deal said to have been reached back in June 2007.
It followed months of negotiations as the airline sought to establish a base outside the Republic. Issues under discussion were said to include charging rates and £900,000 in launch support for the three Airbus A320s over the first three years.
According to BIA, the airline then moved its Belfast operation in breach of a binding 10-year contract.
Mr Kavanagh has rejected that assertion, telling the court his company lost up to €44 million from having a base at Aldergrove.
Under cross-examination by counsel for BIA, he was asked if he thought the five years spent at the airport had been financially “disastrous”. The airline chief replied: “It was my belief that the investment was not capable of securing or delivering the targeted return and in that context was not sustainable.”
The move to Belfast City was because Aer Lingus could not make its arrangement at BIA work, the court heard.
Mr Kavanagh explained there were three options: terminating the base and re-deploying assets elsewhere; keeping the base at Aldergrove with a revised network strategy; or switching to the rival airport.
Belfast City was said to have emerged as a potential alternative due to a focus on domestic flights. Acknowledging BIA’s “operational advantage” of 24-hour flying, Mr Kavanagh said that there was little demand for flights arriving from London “in the wee small hours”.
He stressed, however: “We never had any issue with the performance of the airport. We had an issue with the performance of the business at the airport.”
Pressed further by Nicolas Hanna QC, for BIA, on the circumstances surrounding the airline’s exit, the chief executive was adamant. “I dispute that we broke a contract,” he said. “We honoured our pricing agreement, we followed [it] and we paid as was detailed in the pricing agreement.”
The case continues.