Aer Lingus to fly five Stobart routes to Britain until ‘at least’ July 19th

Aer Lingus will fly five routes from Dublin and Belfast to Britain until "at least" mid-July following the failure of its regional carrier, Stobart Air.

The airline confirmed the move on Monday as the High Court appointed Deloitte Ireland partners, Ken Fennell and Mark Degnan, as provisional liquidators to Stobart Air, which ceased trading at the weekend.

Aer Lingus said it would fly five routes, Dublin to Edinburgh and Manchester, and Belfast City Airport to Birmingham, Edinburgh and Manchester, until at least July 19th.

BA City Flyer has already said it would operate Belfast City to Exeter and Leeds Bradford. Both Aer Lingus and BA are part of International Airlines Group.

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Aer Lingus maintained that the replacement schedule ensured that “all impacted customers due to travel in the next week” had been offered alternatives.

The company added that where suitable alternatives were not available, customers were entitled a full refund.

The High Court heard on Monday that a 94 per cent fall in passengers on the back of Covid-19 travel curbs cost Stobart Air €19.2 million in lost revenues last year.

Stobart ceased flying after its owner, British aviation and energy group, Esken, said it could not longer financially support the Irish airline.

Lawyers for the the carrier, which operated the Aer Lingus Regional franchise, told Ms Justice Miriam O’Regan, that the company had a deficit of €37 million and was unable to pay its debts as they fell due.

Ms Justice O’Regan said in the circumstances it was appropriate to appoint Mr Fennell and Mr Degnan as joint provisional liquidators to Stobart Air. The issue is due back in court on July 5th.

She urged that worker’s redundancy claims be dealt with quickly. The company employed 480 people.

PSO routes

Meanwhile, the Government is hopeful of re-establishing publicly-subsidized air routes between Dublin and regional airports in Donegal and Kerry before the wider reopening of international travel on July 19th.

Sources said the coalition is planning to undertake a rapid procurement process, which is possible under exemptions to EU tendering rules allowed in exceptional circumstances, for the routes.

It is envisaged an operator would take over both routes for a period of seven months, the maximum which is permitted under the exemption. By that stage, a new public service obligation contract is already set to kick in from January next year.

The intention would be to run the tender process for the full contract while an operator runs the services on a temporary basis. Sources said that a “couple of interested parties are floating about the place” already.

On Monday evening, Aer Lingus indicated that it is “ready” to operate the Dublin/Kerry route, “subject to an appropriate PSO arrangement being put in place”. The carrier also said it is “actively exploring options that would enable the provision of a Dublin/Donegal service”.

Estonian state-owned airline Nordica, which operates PSO routes in Sweden, has also offered to take on the Kerry to Dublin route, it is understood.

Talks with Nordica had begun before Stobart’s collapse and they are understood to have progressed further since.

It is understood that the preference in Government is for an operator to take both routes on, and for the current level of provision and frequency of flights to be maintained. The cabinet is likely to be briefed on the latest developments on Tuesday by Minister for Transport Eamon Ryan and Minister of State for International and Road Transport Hildegarde Naughton, who attends cabinet.

Covid crisis

Known as Aer Arann up until 2014, Stobart had been trading profitably until Covid struck last year, severely limiting air travel, the court heard.

Hopes that the airline could be rescued were dashed after that efforts to sell it to Isle of Man-based Ettyl Ltd failed when the buyer was unable to secure the cash needed for the deal.

Stobart Air’s owner, London-listed aviation and energy group, Esken, terminated a conditional contract to sell the Irish airline when Ettyl told it on May 28th that it had run into problems raising the cash needed.

Estken told the Irish airline’s board on Friday June 11th that it could no longer finance the carrier.

Stobart's contract to operate Aer Lingus's regional services was set to end in December next year. A new airline, Emerald Airways, is due to take on the franchise from January 2023.

Stobart Air was leasing its 13 aircraft, eight of them from a related company, Propius, which was in turn renting them from Goal Leasing.

Stobart leased three planes directly from Nordic Aviation Capital and two from US giant, GE Capital Aviation Services.

Esken guaranteed the leases on all 13 aircraft, which are likely to be returned to the lessors.

The British group is likely to be one of Stobart’s biggest creditors, as it had been bankrolling the airline since taking control of it last year.

Stobart had been part of Connect Airways in which the London-listed Esken group held stake.

Esken had originally owned most of the shares in Stobart Air – an employee trust also held a stake – but sold this to Connect in late 2018.

However, Connect ran into trouble early last year when its other subsidiary, British airline, Flybe, had to be wound up. This prompted Esken to buy 80 per cent of Stobart for €9.8 million.