Questions still remain over EUjet collapse

Mystery surrounds the delay in appointing administrators to failed airline EUjet. While Grant Thornton partners are sorting out the financial affairs of PlaneStation, the airline’s parent company that collapsed with estimated debts of £22million, and subsidiary London Manston Airport Plc, EUjet is not subject to the same rules.

The Irish-registered operator, which was grounded last week with the loss of at least 127 jobs and left more than 5,000 passengers stranded, is still run by its directors, including chief executive P J McGoldrick. The airline is subject to Irish law and an "interim examiner" is understood to have been appointed but this person does not have the power of administrators. Dr Michael Grimes, an airline consultant based in Ireland, said the delay suggested that the banks were happy with Mr McGoldrick:

"I would say he’s left PlaneStation holding the baby."

Administrators asked awkward questions, he added. The present situation left EUjet creditors "in limbo" not knowing against which company to claim. EUjet is clearly pinning the blame for its grounding on PlaneStation. Callers to its Shannon offices are told that flights have been suspended "due to financial difficulties experienced by our parent company PlaneStation".

This has angered Grant Thornton which blames PlaneStation’s demise on EUjet. A spokesman said:

"The airline consistently failed to meet the numbers and ran out of money and at that point PlaneStation wasn’t in a position to offer any more. At no time did the Bank of Scotland lend any money to EUjet. It all went through PlaneStation. PlaneStation kept pumping cash into the airline but the credit line eventually ran out. PlaneStation went to its bankers who said 'we’ve never lent a penny to an airline and we never will'."

Administrators hope their decision to keep around 70 staff at the airport will signal that it could quickly be brought back into use. But they warn it could take months to find a "credible" buyer. Meanwhile, Kent County Council, chastened by its failed gamble to pump £100,000 into EUjet, has rejected calls for an official investigation into what went wrong. Cllr Alex King, Cabinet Member for Regeneration, said:

"It would be unfortunate if anyone asked for a DTI inquiry."

He admitted KCC’s investment, from the Kings Hill development fund, had been a risk – he knew that many people had questioned EUjet’s viability – but risks had to be taken to lift the county. The opportunity to get a passenger airline operating out of Manston was a major opportunity that could not be ignored. And it was a significant achievement that EUjet had operated for nine months and carried more than 300,000 passengers. He dismissed speculation that the airport, a key plank in KCC’s economic strategy, could be used for housing development:

"The county council is determined that Manston will play its part in the transport infrastructure of Kent as an airport."

kentonline 4th Aug 2005

EUJet doomed from the start

Expert claims airline was doomed from first flight

EUjet was a flawed business model that was bound to fail, according to an airline expert. The low-cost airline and its owner PlaneStation, which also owns Kent International Airport at Manston, crashed into administration on July 26 after the Bank of Scotland pulled the plug on PlaneStation’s credit line, thought to be around £25million.

The collapse left thousands of passengers stranded overseas, cost hundreds of jobs and cast a shadow over the longer-term viability of scheduled services operated out of Kent. It was also embarrassing to Kent County Council which had invested £100,000 in the fledgling airline to bring it to Manston.

One expert who long ago pointed out potential problems with EUjet is Dr Michael Grimes, an airline consultant based in Cork, Ireland, close to EUjet’s registered base in Shannon. He warned Kent County Council, the Civil Aviation Authority and PlaneStation but says his warnings went unheeded. Speaking to Kent Business as joint administrators at Grant Thornton attempted to sort out the financial affairs of PlaneStation and London Manston Airport Plc – Irish-registered EUjet is subject to different rules – Dr Grimes said the business model was flawed in his view. He claimed the fare structure was unrealistically low and that the Fokker-100 aircraft used by EUjet were uneconomic and unreliable.

P J McGoldrick, the airline’s colourful Irish chief executive, whose son Stuart became EUjet commercial director, revealed that one plane had been out of service for most of the year. Dr Grimes said:

"They might have had a chance if they’d had a proper plane for the job but the Fokker-100 never made any money for anybody."

He claimed that leasing charges on the aircraft were exorbitant and he had serious concerns about P J McGoldrick. He was previously involved in Ryanair at a time when it was a loss-making airline. Kent County Council was aware that Mr McColdrick was also involved with an airline that collapsed in 2000 with reported multi-million pound liabilities and the loss of hundreds of jobs.

Dr Grimes said he had sought an investigation into the running of EUjet and PlaneStation but no action was taken. He claimed that his letters to KCC leader Sir Sandy Bruce-Lockhart went unanswered and telephone calls were blocked.

"These people have themselves to blame because all these deficiencies were notified to the relevant authorities, including Kent County Council, who did nothing."

He did not see much of a future for Manston as a passenger airport – it is already a successful freight terminal – except for shuttle services across the Channel. Cllr Alex King, KCC Cabinet for regeneration, defended the council’s investment in a private sector venture.

"EUjet would not have come to Kent without that £100,000. I do not regret it for one moment. That was an investment that brought an airline to Manston. That airline has demonstrated you can fly those routes. We believe that Kent International Airport has demonstrated its viability over many years as a cargo airport. We believe EUjet, against tremendous difficulties in the aviation world, has demonstrated the potential for Manston as a passenger airport."

Andrew Conquest, a partner with Grant Thornton, said:

"Our intention is to continue to operate the airport while we seek buyers for the business and we are currently reviewing the funding requirements to enable the airport to continue to operate in the short term."

kentonline 3rd Aug 2005

New era dawns at Kent airport

Kent is finally joined by air to the rest of Europe. EUjet’s new low cost services got off to a flying start yesterday when the first flight - a Fokker-100 - took off from Kent International Airport at Manston, at 6.15am for Dublin. It marked the start of a service that is set to boost east Kent and turn Kent at last into an aviation hub. It has already brought 300 new jobs to Thanet and there could be 100 more over the next 18 months.

Flights on day one were 75 per cent full, with more than 600 passengers flying to Amsterdam, Copenhagen, Dublin, Nice and Girona. A smaller number flew back to Manston, reflecting the lack of marketing effort by EUjet at the destination airports. By the end of the year, EUjet will be flying to 22 destinations including Prague, Madrid, Milan, Palma, Malaga, Turin, Edinburgh and Manchester.

Airline and airport bosses were delighted with how smoothly things had gone. P.J.McGoldrick, EUjet chief executive, admitted he had been nervous just before take-off. He has invested millions of pounds of his own money in the venture. But the performance had exceeded his expectations. He said:

“We have had an incredible start to what I believe to be an exciting development, not just for EUjet but also for Kent and this airport.”

Airport staff had turned the aircraft around in 26 minutes. Airport staff also aim to get luggage from aircraft to carrousel within eight minutes of the aircraft’s arrival on the terminal apron.

Kent County Council has invested £100,000 in EUjet. Councillor Alex King, Cabinet Member for Regeneration, said it was a gamble that was well worth taking. September 1 was a turning point that would mark the transition of east Kent from the difficulties of the Eighties and Nineties to a successful economy of the early 21st-century.

“This is the first public demonstration of Kent becoming the Go To county.”

PlaneStation, the airport owner, has invested £3million in preparing KIA for the launch of EUjet. One hundred extra staff have been taken on, including security experts. Alastair Robertson, airport chief, said:

“I would anticipate that we will be employing at least an additional 100 people in the next 12-18 months.”

He added that substantial investment had been made in the latest hi-tec and sensitive x-ray equipment. Councillor Jeff Kirkpatrick, chairman of Thanet Council, welcomed the launch of EUjet:

“It is just a great day for everyone here in Thanet. As a bonus to the residents, we will enjoy the privilege of just being able to pop down here and fly away. Things are really happening and today is the day it takes off for real.”

He added that residents should not be concerned about noise because every step had been taken to minimise it. There was no night flying and EUjet is using “extremely quiet aircraft”. EUjet may be the first airline to use KIA but it is unlikely to be the last. Airport chiefs are in talks with two other airlines interested in operating to other destinations. And charter services to Florida are expected to start next year.

kentonline 1st Sep 2004