Stobart to focus on Southend Airport expansion following airline sale
Stobart Group is planning to ramp up investment in London Southend Airport after selling its airline, Stobart Air, and its aircraft leasing business, Propius, to Connect Airways, a joint venture set up with Virgin Atlantic and Cyrus Capital.
It made £25.9 million from the sale of Stobart to Connect, which at the same time acquired the assets of Flybe in February for £2.8 million.
Releasing its full year results for the 12 months to the end of February, during which the aviation, energy and engineering group made an overall loss of £58.2 million, Stobart said the joint venture with Virgin, in which both groups hold a 30% state, will identify cost synergies between Stobart Air and Flybe.
Stobart said it plans to expand Southend Airport to handle 10 million passengers a year, up from 1.5 million last year. It is also planning to develop its energy business to deliver two million tonnes of biomass fuel a year.
CEO Warwick Brady said: "Stobart Group has a clear focus on developing infrastructure assets in the aviation and energy sectors. These are high growth assets with strong market positions that are now well positioned to become increasingly cash generative.
"We will invest in accelerating the growth of our aviation and energy businesses through existing cash resources and further non-core asset sales. By doing this, we can deliver sustainable operating cash flows and significant long-term value for shareholders."
Stobart said Southend Airport, which increased its passenger traffic by 33% last year, has secured a ‘landmark’ agreement with Ryanair, which will boost traffic by one million passengers a year from this spring. At the moment, its main operator is Flybe.
The group is also expecting the first commercial flights for over 25 years to take off from Carlisle Lake District Airport in July. It has also taken over the operation of Durham Tees Valley Airport.
The group has raised £53.1million for further expansion through the issue of a five-year exchangeable bond secured over its shares in Eddie Stobart Logistics.
In announcing the group’s results, outgoing chairman Iain Ferguson thanked former CEO Andrew Tinkler ‘for his contribution to the business’, despite the long legal wrangle between Tinkler and the board.
Ferguson said: "The dispute was especially difficult for the hard-working employees of Stobart Group. I want to thank them for remaining focused during this time. Despite our disagreement, the Board and I want to recognise how much Stobart Group has benefitted from Andrew Tinkler’s entrepreneurial flair in the past and thank him for his contribution to the business. However, it is now time to move on and focus on building value for all of our shareholders."
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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