Negotiations between Aer Lingus and a consortium led by Ms Gillian Bowler, which are key to saving more than 300 jobs at student travel firm USIT, were continuing last night.
An examiner appointed to USIT in February reports to the High Court today on his scheme for saving USIT Ireland Ltd and USIT World.com.
But the Irish investors who want to take over the firms are not prepared to go ahead with the envisaged deal unless they can secure an agreement with Aer Lingus on how they will do business.
Last night, sources indicated a deal was unlikely given the positions being taken by the parties involved. It is not clear how much time is left before the firms go into liquidation. They are considered viable but have huge debts and operate on tight margins.
"We have to be getting near to the end of the road but I don't think tomorrow will be it," said one source. A spokeswoman for the companies said they had been operating successfully since the appointment of the examiner.
Aer Lingus is out of pocket by more than €1 million as a result of the crisis which hit the USIT group when travel numbers slumped after the September 11th attacks on the United States.
Ms Bowler, the founder of Budget Travel; her husband, Mr Harry Sydner; Dublin corporate finance house, Ion Equity, and two unidentified Irish property investors, have said they will invest an initial €2.5 million as well as working capital to fund liabilities, if a deal can be worked out with Aer Lingus.
But key talks between the consortium and Aer Lingus have not yet led to agreement. Among the issues being discussed are future business arrangements and the make up of the USIT companies following any deal.
The involvement of the Irish consortium in negotiations for the takeover of the USIT group's operation in the Republic, has come as a surprise following the February appointment of examiner Mr David Hughes of Ernst & Young, at the request of USIT World plc, the USIT holding company.
Following the USIT collapse its holding company was taken over by its former rival, Swiss-based Student Travel Association (STA). STA has 82 per cent of the holding company and USIT staff the remaining 18 per cent. However USIT World plc is now expected to be placed in liquidation tomorrow.
Mr Hughes, who is responsible to the companies to which he was appointed and not to STA, has ended negotiations with that company on a rescue deal for USIT Ireland Ltd and USIT World.Com. At the time of his appointment it was stated in court that STA would make €600,000 available to keep the USIT companies in business while Mr Hughes put a scheme of arrangement in place. But the companies are understood to have traded well since that time and the cost to STA may have been less than envisaged. STA had no comment on the matter yesterday.
It was also stated in February that Aer Lingus had agreed terms with the examiner and the companies on payment for flights booked through USIT. In February the court was told Aer Lingus was incurring a liability of approximately €5,000 per day following the appointment of the examiner.
USIT's Irish operation is understood to have operated profitably in recent years, making about €800,000 per annum on tight margins. But the companies took on other group company debts. Director, Ms Mairin Colleary, told the High Court in February that USIT Ireland was essentially sound but for €15 million loaned to other group companies which was now irrecoverable.
USIT Ireland sells flights to students and young people. It also operates the J-1 programme to the United States, a programme which involves sales of transatlantic Aer Lingus flights.
