Stobart Group eyes deal to buy back its former airline operations
Stobart Group is considering buying its airline back from administrators following the collapse of Connect Airways last month.
The Carlisle-based group, which covers biomass, rail, infrastructure and airport interests, was responding to speculation over its potential acquisition of Stobart Air and Propius, from EY, the administrators of Connect Airways.
The businesses were owned previously by Stobart Group and were sold to Connect Airways when that business was formed by the Stobart Group, Virgin and Cyrus to acquire FlyBe in February 2019.
Stobart acquired the outstanding 33% interest in aircraft leasing business Propius Holdings, in February 2017, in a $14.7m cash deal with Dublin-based Irish flag carrier Aer Lingus.
Neither Stobart Air nor Propius are, themselves, currently in administration.
Connect Airways collapsed on March 5, with the loss of 2,400 jobs, blaming the coronavirus crisis which forced many passengers to cancel their travel plans.
In a statement to the stock exchange today, Stobart Group confirmed that it is “reviewing all options in relation to the future of Stobart Air and Propius during this unprecedented time including the possibility of acquiring the businesses from the administrators”.
It said a range of discussions are ongoing and there is no certainty that any transaction will take place.
The Stobart Group board said it believes that Stobart Air and Propius have a viable future after COVID-19 and that, by working with Aer Lingus as franchise partner, it can place the business on a secure footing and manage the impact of guarantee obligations in a controlled manner.
These legacy obligations relate to a sale and leaseback of aircraft carried out in early 2017.
They include maintenance commitments, together with certain obligations linked to the franchise agreement with Aer Lingus and certain fuel hedge arrangements in respect of Stobart Air and, cumulatively, could potentially be significant, said the Stobart Group.
It added that these obligations remained with the group after the Connect Airways transaction as they were scheduled to run off over a period of time, and it was not possible for these to be released.