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