The owners of Carlisle Lake District Airport said the sale to Ettyl Limited has fallen through after efforts to find funding for the deal were unsuccessful.
At the end of May Isle of Man firm Ettyl Limited confirmed that the original funding package to support the sale of both the airport and Stobart Air was no longer available and that discussions on alternative funding options were “ongoing”.
Esken, the owners of both Carlisle Lake District Airport and Stobart Air, say Ettyl have been unable to conclude the transactions in the required timescale. In an update to the London Stock Exchange, Esken said Carlisle airport would have been sold for £15m.
Contracts for the transactions for the sale have been “terminated with immediate effect”, Esken said.
In the absence of any alternative purchasers or sources of funding for the Stobart Air (SA) business within the timescales required, Esken has advised the board of SA that it will not continue to provide financial support to the business going forward.
As a result of this the board of SA has terminated its franchise agreement with Aer Lingus, will cease trading and is taking steps to appoint a liquidator.
A statement from Esken said: “Since April 2020, Esken has taken all steps to minimise the cash requirement of SA while seeking to find a purchaser recognising the importance of the airline to connectivity between the UK and Ireland, the 480 jobs involved and the fact that a sale would be a better outcome for shareholders.
“Esken has been successful in reducing the impact of its pre-existing obligations and in agreeing terms under which it has control of residual obligations through to expiry.
“However, the continuing impact of the pandemic which has resulted in almost no flying since April 2020 and the decision taken by Aer Lingus to award preferred bidder status to another party for the franchise agreement beyond its expiry in December 2022 significantly hampered the exhaustive steps taken to secure a future for the business and its staff.
“Esken will retain the ownership of CLDA rather than it being sold for £15m but will actively explore strategic options for the use of this asset in discussion with stakeholders including potential alternative commercial opportunities for the airport.”
David Shearer, executive chairman at Esken, said: “It is disappointing for all stakeholders that we have been unable to conclude the sale of Stobart Air as a going concern despite the tireless efforts of my executive colleagues, the management team of the airline and the team of advisors who have supported them.
“I am acutely aware of the impact this will have on the staff, customers and the businesses associated with the airline but the continuing impact of the pandemic in terms of lockdown and limited travel has prevented us from achieving a better outcome.
“Our focus now is to secure the position for the rest of the group and ensure that we have the necessary resources to support the recovery plans for our two core businesses as we anticipate the return to normal activity levels in a post-COVID world.
“The discussions on future financing including the strategic partnership for London Southend Airport are continuing and I fully expect to bring these to a positive conclusion when we announce our year end results by the end of June.”
