Former Flybe owner part of potential new Southend airport ownership plan

Southend airport is set to come under new ownership as part of a complex refinancing arrangement.

Aviation group Esken has negotiated a new deal with creditor Carlyle and Cyrus Capital Partners which would see the Essex airport apply for restructuring proceedings. The stake held by Esken, formerly Stobart Group, would be reduced to below 50%.  

US private equity firm Carlyle issued loan of almost £200 million as the airport sought to restore its finances after a virtual shutdown during the pandemic.

But court proceedings were issued by Carlyle last year, as it alleged that Esken breached certain terms of the loan.

Esken, which put the airport up for sale last year, told investors on Monday that it had negotiated a recapitalisation proposal with Carlyle and Cyrus and was now considering whether to sign off on the agreement. 

The plan would result in Esken’s shareholding in Southend airport being “significantly reduced” to a minority interest. 

Funding of the proposal agreed with the board of the airport includes support from both Carlyle and Cyrus “to secure the future of the airport”.

Hedge fund Cyrus rescued Flybe during the pandemic after a failed turnaround attempt by Virgin Atlantic but a slimmed down version of the regional carrier collapsed after nine months in January 2023.

Esken said it was considering if the terms of the recapitalisation are acceptable or whether it will contest the airport’s restructuring plan through the courts.

“There can be no certainty that any of these discussions will lead to a consensual agreement, but Esken believes that a consensual outcome would be in the interests of all parties and will take all reasonable steps to facilitate such an outcome,” the company said.

Esken also warned that the deal could be forced through by the courts and may have a “material adverse impact on the group”.

Airport chief executive John Upton told London newspaper The Standard: “This is great news for everyone connected with London Southend airport – for our people, passengers, airline partners and local communities. Carlyle and Cyrus both have extensive experience across the aviation industry and deep knowledge of our airport.

“Their commitment to our future delivers both certainty and stability and will enable us to accelerate our growth plans with their considerable investment capability and operational expertise.

“On behalf of all at the airport, we would also like to thank Esken for its support and enabling this agreement to be reached.”

Carlyle and Cyrus Capital Partners said: “Carlyle and Cyrus are excited to work closely with John and the rest of London Southend airport’s management team to capitalise on the many opportunities ahead. 

“This transaction combines our financial strength and expertise with new funding to secure the airport’s long-term future for the benefit of all stakeholders and ensures the airport is well-positioned to thrive.”

Tour operator Mann Link Travel last month revealed plans to run a short break to Sonderborg in Denmark from Southend in August using Danish airline Alsie Express following Aeroitalia announcing six flights a week to Milan from March.

EasyJet remains the main carrier operating from Southend after returning with a limited network after the pandemic. Points served this summer include Alicante, Malaga, Faro, Amsterdam, Paris and Palma. Balkan Holidays is also to run summer flights to Bourgas in Bulgaria. 

The airport handled almost 2.3 million passengers on routes to about 40 destinations in pre-Covid 2019.        

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