9th Aug 2021 11:09
(Alliance News) - Esken Ltd on Monday said it was in talks with replacement carriers as it seeks to compensate for the decision of Ryanair Holdings PLC plans to close its base at London Southend Airport.
Shares in Esken were trading down 2.7% at 15.92 pence each in London on Monday morning. Ryanair was down 0.3% at EUR16.63.
Esken, formerly known as Stobart Group, is an infrastructure, aviation and energy company with operations in the UK and Ireland. It owns and operates London Southend.
Last Friday, Ryanair announced plans to close its base there on November 1. The low-cost carrier decided to redeploy the two aircraft currently located at London Southend to other bases, after the pandemic significantly affected the Dublin-based company's load factors and yields.
Esken said it expects Ryanair's decision to have a "negligible" effect on its current financial year, given expectations of limited flying in the upcoming winter season.
Management has time to initiate cost savings and deferral of discretionary capital expenditure ahead of the following period, financial 2023, the company said.
Esken said it also plans to attract new carriers to the airport to replace Ryanair.
"The group is in active dialogue with a range of low cost and flagship carriers where the previously proven route profitability, the airport's efficient operating cost base and the safe passenger experience is likely to prove attractive as demand recovers," the company said.
If the company takes no mitigating actions, it said Ryanair's departure would result in a hit of up to GBP1.4 million to earnings before interest, tax, depreciation and amortisation and to cash headroom in financial 2023.
The ring-fenced funding facility for the airport has adequate headroom to cover any such potential impact, Esken noted. Early last month, Esken secured GBP125 million in financing for Southend Airport from private equity investor Carlyle Group.
"Esken remains focussed on targeting airlines for the recovery of flying in summer [2022] when demand is expected to show a recovery post Covid-19," the company said.
Executive Chair David Shearer added: "The fundamental commercial rationale for [London Southend Airport] remains strong and our partnership announced recently with Carlyle will allow us to capitalise on that opportunity as passenger demand recovers."
By Scarlett Butler; [email protected]
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