31st Aug 2022 09:16
(Alliance News) - Esken Ltd on Wednesday said it expects to take a hit after London Southend Airport's global logistics partner said it will cease to use cargo operations, effective from mid-September.
The London-based aviation and renewable energy company said: "LSA has been one of its global logistics customer's best performing aviation hubs. However, the operation has over time reduced from an original 18 flights per week to 7 since October 2021 and the global logistics partner has now advised LSA that it will cease operations in line with a change of strategic focus from air freight to road-based cargo."
Esken didn't name the customer.
As a result, Esken said it expects a GBP900,000 hit to earnings before interest, tax, depreciation and amortisation for the remainder of the current financial year, before exit fees. Esken's financial year runs to the end of February 2023.
There are exit fee provisions within the contract, and the logistics customer will also pay fees related to its 60-day notice period, the company added.
In the 2024 financial year, Esken expects its Aviation arm will take a GBP2.9 million hit, prior to any further cost savings or new cargo agreements. Esken has been in talks with other logistics businesses, and it added that it is in "positive dialogue" with a range of carriers over passenger flights for the summer 2023 season.
Esken said LSA remains well positioned for the recovery and longer-term growth in commercial passenger flying.
Outside of Southend airport, Esken said its Renewables division continues to perform well and remains on track to achieve Ebitda in excess of GBP22 million in the current financial year.
Esken shares were up 4.7% at 4.85 pence each on Wednesday morning in London.
By Xindi Wei; [email protected]
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