Aer Lingus franchise Stobart Air collapses citing pandemic pressures for financial failure

Aer Lingus franchise Stobart Air collapses citing pandemic pressures for financial failure

STOBART AIR has announced its collapse just weeks after revealing plans to launch new routes between Britain and Ireland. 

The Irish air operator which runs Aer Lingus' regional services said on Friday, June 11 it was terminating its franchise agreement with the airline and was in the process of appointing a liquidator.

In a statement the airline confirmed: “It is with great regret and sadness that Stobart Air can confirm that the board is in the process of appointing a liquidator to the business and the airline is to cease operations with immediate effect.”

The spokesperson explained that the move was unavoidable after a planned buyout of the firm fell through.

“Last April, Stobart Air announced that a new owner had been identified. However, it has emerged that the funding to support this transaction is no longer in place and the new owner is now unable to conclude the transaction,” they confirmed.

“Given the continued impact of the pandemic which has virtually halted air travel…and in the absence of any alternative purchasers or sources of funding, the board of Stobart Air must take the necessary, unavoidable and difficult decision to seek to appoint a liquidator.”

The airline apologised to its customers for the inconvenience caused at short notice and said all 480 staff had been informed.

The sudden announcement led to the cancellation of several flights on Saturday, June 12, from Dublin and Belfast City airports to UK cities.

Ireland’s Department of Transport is examining the implications of the announcement and the cancellation of the Government-funded routes which operate between Kerry and Dublin and Donegal and Dublin.

Minister for Transport, Eamon Ryan TD said: “The announcement is concerning news for the affected workers and for regional connectivity. We will be engaging with all stakeholders today and over the comings days to restore connectivity to the regional airports affected by today’s announcement.”

Minister of State Hildegarde Naughton TD added: “We are acutely aware of the ongoing impact of the pandemic on the sector and are working to secure these vital regional routes. The restoration of our regional connectivity is of critical importance and will be prioritised by the Government in the coming days.”

The Irish Government is acutely aware of the devastating impact that Covid-19 restrictions are having on the aviation sector.

By the end of June 2021, the sector will have received approximately €300 million in State funding, spanning employment supports, waiver of commercial rates and deferral of taxes.

The bulk of the support to airlines is through the TWSS/EWSS wage subsidy schemes, which were specifically designed to maintain the link between employers and employees.

Liquidity support has also been made available by ISIF to large aviation enterprises.

Stobart Air was one of Europe’s leading franchise, ACMI and charter aviation specialists, operating flights in countries throughout Europe.

As an established partner of Aer Lingus, it operated its busy Aer Lingus Regional service from Dublin, Cork, Donegal and Kerry.

A replacement schedule for Aer Lingus Regional customers was put in place, days after the airline’s collapse, with Aer Lingus operating five out of 12 routes immediately impacted and BA City Flyer operating two.

“Alternative operations for the outstanding routes are still being determined,” Aer Lingus said.

“All impacted customers are being contacted directly and offered details of an alternative flight where feasible. All impacted customers also have the option of a full refund.”

Aer Lingus was due to replace Stobart Air with a new regional airline next year, but there has been no confirmation on whether this date can now be brought forward.