Turbulent time ahead:
Stobart warns on liabilities
THE UK’s Stobart Group has warned investors that it is evaluating how to manage liabilities it has to Dublinbased Stobart Air.
Stobart Air is part of Connect Airways, in which Stobart has a 30pc stake. Virgin Travel Group, a subsidiary of Virgin Atlantic, also has a 30pc stake, while Cyrus Equity Partners owns 40pc.
Stobart Air operates the Aer Lingus Regional service on a franchise basis.
Stobart Group, whose CEO is Warwick Brady, said that a number of guarantees and potential lease obligations exist between it and the separate subsidiaries of Connect Airways, being Stobart Air and Propius, which have been impacted by the collapse of Flybe.
Flybe, which was also part of Connect, collapsed last month.
“Stobart Group is actively evaluating how best to address and manage these liabilities and is in discussion with stakeholders regarding the most appropriate solutions,” the company said in a statement.
Stobart Group also owns London’s Southend Airport.
“Given the current market conditions, additional liquidity is likely to be required and the group is actively reviewing the most appropriate sources of funds to cover the period during which the airport is affected by the Covid-19 virus,” the company said.
“In addition, the group has moved swiftly to take measures to conserve cash and reduce its cost base in order to provide further resilience through this period,” it stated.
Last week, Stobart Air boss Andy Jolly wrote to workers, urgently seeking staff to take unpaid leave or to accept reduced hours. It has also
halted recruitment and frozen pay rises.
Prior to the collapse of Flybe, Stobart Air was operating more than 1,000 flights a week on 38 routes.
“The short-term uncertainty driven by the Covid-19 outbreak has impacted on global airport passenger traffic generally, and London Southend Airport specifically,”
Stobart Group said in a trading update.
It added: “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.”