Connect Airways, parent of Stobart Air (Dublin International), which operates Aer Lingus Regional, and now-bankrupt flybe. (2002) (Exeter), fell into administration in the UK on March 18, the Irish Independent has reported.
Administration means that the accountancy firm Ernst & Young Global Limited (EY) now controls Connect and 49% of Stobart Air, the remaining 51% of which is owned by its employees.
Connect Airways itself is owned by US firm Cyrus Equity Partners (40%), UK-listed infrastructure firm Stobart Group (30%), and Virgin Atlantic subsidiary Virgin Travel Group (30%).
“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,” said a statement to the Irish Independent dated March 18.
“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.”
Stobart Group had already said in a trading update on March 17 that talks it was holding on an investment by a possible strategic airport development partner in London Southend Airport - another Stobart Group subsidiary - had been put on hold because of the current aviation market uncertainties.
It said it had been in talks for several months on an initial minority investment from the potential partner, which local media speculated was 25%. It had indicated a headline value for the airport between GBP700 million and GBP800 million pounds (USD843 million to USD964 million).
Additional liquidity will likely be needed because of the disruption to its business, Stobart Group said as the coronavirus crisis continued to hit airline traffic.
“The short-term uncertainty driven by the Covid-19 outbreak has impacted on global airport passenger traffic generally, and London Southend Airport specifically,” it warned. “The airport’s airline partners have cautioned that they are undertaking significant route cancellations. These actions are likely to continue on a rolling basis for the foreseeable future and could result in the grounding of the majority of airline fleets.”
The company added that it was “actively reviewing the most appropriate sources of funds to cover the period during which the airport is affected” by the virus. Stobart Group “has moved swiftly to take measures to conserve cash and reduce its cost base in order to provide further resilience through this period.”
Regarding its involvement with flybe., the company warned that several guarantees and potential lease obligations exist between itself and the separate subsidiaries of Connect Airways - Stobart Air and Propius Leasing - which have been hurt by the collapse of the regional carrier in early March.
“Stobart Group is actively evaluating how best to address and manage these liabilities and is in discussion with stakeholders regarding the most appropriate solutions,” it concluded in the trading update.
