Planestation to gain control of EUjet

The owner of Kent International Airport is to raise £30 million to gain ownership of budget airline EUjet – or face liquidation.

Planestation, which already has a 30% stake in the carrier, admitted that failure to raise the additional funds would mean the company folding as its principal bank would withdraw its support.

The company revealed that its net assets have dropped by £2 million to £8.5 million due to a cash outflow from its various airports and funding of EUjet since September 30.

Planestation said: “The group is currently dependent on the short-term support of its bankers and its bankers confirmed that unless the issue was announced by December 16 that support would be immediately withdrawn.”

Announcing plans for the £30 million share placing principally to provide 18.5 million euros to support EUjet’s existing and future operations, Planestation said: “Investors should be aware that if the proposals are not approved the Bank of Scotland has confirmed that it would immediately withdraw its short term facilities and the company would not be able to meet its liabilities as they fell due.

“In these circumstances no other source of finance would be available to the company and the directors would have no alternative but to apply immediately for administration or to commence an insolvent liquidation of the company.”

Over the next 12 months Planestation said EUjet needed £42.7 million – £16.4 million for aircraft leases and maintenance costs, £10.6 million for fuel costs, £12.4 million for route, airport and handling costs and £3.3 million for marketing and distribution.

“These amounts will be partially offset by the expected revenues of EUjet over the next year,” Planestation said.

EUjet had more than 85,000 advance bookings as of December 3 and carried 73,500 passengers in the three months since its launch offering low fares from KIA on September 1. The airline’s booking levels have increased from less than 3,000 a week in the first week of operation to almost 7,000 a week in the seven days ending December 3.

Planestation said: “However, following adverse media comment about the financial stability of low-cost airlines including EUjet, early indications are that the number of bookings received and passengers carried in the first week of December have been below expectations.”

EUjet has already dropped two routes and others may be cut as it focuses on developing more profitable services. Planestation pumped £5 million into EUjet in September following an initial investment of £2 million for the 30% stake.

The carrier has a fleet of five Fokker 100s on lease flying from KIA to Murcia, Malaga, Amsterdam, Barcelona, and Edinburgh. It also operates from Shannon to KIA, Malaga, Murcia and Faro.

Plans for the share placing – the second this year – are subject to approval by shareholders at an extraordinary general meeting on January 12.

Planestation CEO Martin May said: “We have taken the decision to exercise our option to take full control of EUjet as we feel that this will provide us with the ability not only to build a successful low cost airline but also safeguard the value of our core airport assets.”

Report by Phil Davies