Aer Arann flights 'unaffected'

 

Direct air access is vital to the south-east region is vital, politicians and local business groups said today, a day after regional airline Aer Arann entered interim examinership.

At a High Court sitting yesterday evening, Ms Justice Maureen Clark appointed Michael McAteer of Grant Thornton as interim examiner to the business, owned by Galway businessman Pádraig Ó Céidigh.

Fine Gael said the examinership was necessary to give the airline time to find an investor, and could have a future.

“There should be no panic response from regional airports in particular as to the future viability of Aer Arann. While undoubtedly the company faces significant challenges, with the right business plan and new financial backing Aer Arann is confident that it can secure a viable operating future and continue to provide valuable employment to its staff, " Transport spokesman Simon Coveney said.

Waterford Fine Gael TD John Deasy said the news of the airline's interim examinership was of some concern to businesses and residents in the south east as the airline is the sole commercial operator at Waterford Regional Airport. He said support to maintain direct air service links to the south east are "absolutely crucial".

President of Waterford Chamber Tom Murran said the flights in and out of the airport continued.

“Waterford has been and will continue to be a successful part of the Aer Arann networks,” he said.

The case will come before the courts for a full hearing on September 8th, when it is expected that the company will enter examinership for a period of at least 70 days. In the interim the company will operate under the protection of the courts.

The court was told that the airline was seeking the protection of the court because it is currently insolvent and cannot pay its debts.

The airline said last night that its day-to-day operations would not be affected during the interim examinership period and that all flights would operate as scheduled. This includes the regional flights operated by Aer Arann on behalf of Aer Lingus.

Rival airline Ryanair has called for an investigation of public service obligation subsidies, which the Government pays to Aer Arann to subsidise some of its regional routes and is worth up to €10 million to the firm.  

The examinership does not involve Aer Arann Islands, a company also owned by Mr Ó Céidigh and which operates flights between Connemara and the Aran islands.

The court heard that the airline’s creditors include AIB, which is owed €3.9 million, the Revenue Commissioners, the Dublin Airport Authority, Aer Lingus and the Irish Aviation Authority. AIB is prepared to provide a €1 million overdraft to the airline during the period of court protection, and Aer Lingus is supporting the petition, the court heard.

Counsel for the airline told the court that the airline’s deficit as a going concern was approximately €10 million, and that there would be €19 million available for unsecured creditors.

The court heard that the company is looking to secure additional investment, and to date three investors had expressed an interest.

It is understood that the decision to petition for examinership was also prompted by the company’s difficulties in servicing its contracts with aircraft leasing companies.

Aer Arann operates 13 aircraft. It employs 320 people at its bases in Dublin and Galway, as well as in Shannon, Cork, Waterford and the Isle of Man.

The company said last night it intended to preserve as many of the jobs as possible, as well as hundreds of associated jobs in airports and aviation support services firms.

Examinership arises when a company cannot meet its debts and applies to the court to seek protection from creditors to allow it to restructure and negotiate a settlement with creditors.

The examinership process can last up to four months.

In a statement last night, the company said it has incurred losses of €18 million since 2008. It lost €6 million in both 2008 and 2009 and has already lost €6 million to date this year, primarily due to the impact of the volcanic ash disruption.