There seems to be light at the end of the tunnel for Aer Arann as UK logistics group Stobart announced it will be investing €2.5 million for the airline to operate flights to London Southend Airport.
This boost came as the High Court on Monday approved the continuation of the examinership protection for Aer Arann after Justice Mary Finlay Geoghegan was told that an investor had been secured.
Stobart, which owns Southend Airport, announced this week that it has signed a five-year operating agreement with Aer Arann with the new flights due to commence in March next year.
It is understood Stobart will have a small stake in the airline in the form of a convertible preference share but that it will not be involved in the day-to-day management of the business. Aer Arann chairman and owner Padraig O’Ceidigh will retain a majority stake and the management team will remain in place and continue to be led by chief executive Paul Schutz.
Stobart is hopeful that the deal will generate 300,000 passengers a year on routes to Southend Airport and will help support further development plans for the airport. Stobart business and brand in Ireland as well as air freight opportunities are also expected to benefit. However the agreement is conditional on the airline successfully exiting through examinership. The company and the examiner appointed will be working to eliminate these conditions and it is hoped that the company could exit examinership before the end of the month.
Commenting on the potential of the Aer Arann/Southend combination Managing Director of Stobart Ireland, Sean Brogan, said: “Aer Arann’s reputation as a regional carrier fits perfectly with our ambitions to develop London Southend Airport as a passenger and freight hub of choice.
“We look forward to advancing our plans further with Padraig and the full Aer Arann team,” said Mr Brogan.
According to a statement from Aer Arann, Justice Geoghegan approved the continuation of the examinership of Comhfhorbairt Gaillimh trading as Aer Arann.
Mr Michael McAteer of Grant Thornton, who was appointed examiner to the airline last August, told the High Court that a conditional investment agreement had been signed on Monday and in light of this he remained of the opinion “that the company has a reasonable prospect of survival as a going concern”.
The examiner is currently in the process of finalising his scheme of arrangement and intends to issue these proposals to creditors at meetings which are due to take place next week. Aer Arann recorded losses of €18.5 million for the last two and half years. Some of the creditors include Allied Irish Banks, The Dublin Airport Authority, and the Revenue Commissioners. The next court hearing has been set for October 22.