Everything must go, as Esken puts the ‘for sale’ sign up

Esken, the former Stobart Group, has put the ‘for sale’ sign up following its strategic review.

The Carlisle-based group, focused on aviation and renewables, declared today that it believes it is in the best interests of all stakeholders to secure the long term potential of its businesses and deliver value for Esken shareholders through a managed disposal process.

A sale process for Esken Renewables is currently in progress, with a number of interested parties involved in discussions.

A decision has also been taken to explore a sale of the Aviation business, primarily London Southend Airport, with initial planning for this phase having commenced.

A key objective will be to find the right buyer with the capital to support the growth prospects of the airport over the long term and benefit airline partners, customers and local stakeholders.

The group continues to seek buyers for its non-core assets which had a net book value of £36m at August 31, 2022.

The net proceeds from disposals will be used firstly to pay down debt and provide liquidity to the remaining group until the disposal programme has been completed. Esken said it expects to provide a fuller update on progress at the time of the announcement of the full year results for the 12 months to February 28, 2023.

On February 2, 2023, the company reported that Esken Renewables’ biomass plant customers had experienced unplanned outages during the winter months, reducing the total volume of waste wood supplied by Esken and the associated gate fee income.

These unplanned outages have continued throughout February 2023 along with a market-wide waste wood supply issue in the month which led to a short term weakening of gate fees. As a result, Esken Renewables is now expected to deliver EBITDA of circa £19m for the full year.

Management expect that normalised plant operating levels and waste wood supply will return in 2024 and, as of March 1, 2023, all plants are operating. As announced previously, Esken Renewables also entered into a new sub supply agreement to support the Chilton Biomass plant, replacing the supply provided by the Port Clarence processing and storage site, creating an additional £0.9m of annual recurring EBITDA from April 1, 2023. Two additional supply agreements also commenced in September 2022, supporting the total volume of waste wood supplied by Esken Renewables.

Regarding its London Southend Airport and Star Handling business, Esken said the outlook across the UK aviation sector for summer 2023 is increasingly positive, with many larger airports expected to be at or close to full capacity.

This is expected to result in an increased focus on the available peak time slots at London Southend Airport from next year onwards. The management team continues to engage actively with airline partners about future plans.

In January 2023, London Southend Airport secured a multi-year partnership agreement with easyJet to operate from the airport and announced it will operate a new route to Amsterdam. This will be the fourth destination easyJet serves from London Southend Airport, alongside Malaga, Majorca and Faro.

The addition of the new Amsterdam route, alongside increased frequencies to Faro means the airline will now operate up to 18 weekly departures this summer – a 30% increase compared with last summer. Flying is scheduled to start for the summer season on March 29, 2023.

London Southend Airport continues to manage its cost base to match activity levels while identifying ancillary sources of revenue. The airport has hosted a number of TV and advertising projects and is also supporting a new logistics partner on a temporary basis from January 8, through to March 25, 2023.

Star Handling is also continuing its recovery post pandemic, and its reputation for excellent customer service resulted in a renewed mandate at Manchester Airport with SAS – Scandinavian Airlines. In addition, Star Handling won a new mandate with TAP Air Portugal to service the airlines’ needs at Manchester Airport and has a pipeline of further near term new business mandates.

At the year end the group had returned four of the eight leased planes to the lessors where it had continuing lease obligations and the remaining four are on track to be returned over the period to September 2023. The costs incurred on handback maintenance and residual lease payments have been within the provisions made.

Esken had unrestricted cash of around £49m at close of February 28, 2023, and the group’s headroom is tracking in line with management expectations.

In June, 2018, the then Stobart Group said it had removed chief executive, Andrew Tinkler, which began a long-running and costly legal battle between the two parties.

Then, in May 2020, the firm announced it had sold the intellectual property rights to the Eddie Stobart and Stobart brand names for £10m to Eddie Stobart Logistics.

Early in 2021 the group announced it would change its name to Esken.