Analysis: Eastern Airways struggled to take off for a while

Eastern Airways’ demise came abruptly, with the airline filing for administration and the Civil Aviation Authority confirming all flights were cancelled on October 27.

 

The UK regional carrier sought administration both under its own name and that of its registered company name Air Kilroe. However, parent company Orient Industrial Holdings remains in operation.

 

It was confirmed the airline had entered administration on November 6, after the majority of its 330 staff were made redundant.

 

Eastern Airways’ accounts suggest the carrier could have filed for administration earlier.

 

The most-recent accounts for the 12 months to March 2024 show a profit of £140,000 and debts of £11.9 million owed to creditors.

 

That profit came from a turnover of £28.6 million – 80% from UK operations and 20% earned in continental Europe.

 

The airline remained a going concern, according to its directors, owing to “a strong statement of financial position” from Orient Industrial Holdings including a letter “stating the group will offer working capital support as needed”.

 

The accounts also note the carrier was “in ongoing discussions with liquidity providers”.

 

Unfortunately, the support ran out last week despite the carrier having had three profitable years post-pandemic.

 

Eastern had recorded a £214,500 profit to March 2023 on turnover of £23.3 million, and £382,000 on turnover of £16.3 million in 2022.

 

That followed a loss of £450,000 in 2021. The carrier had recorded profits of £7 million for the 12 months to March 2020, although this was wholly due to £9 million in exceptional items raised from the disposal of assets and release from “onerous leases”. Without these Eastern would have lost £954,000 in 2020.

 

In 2019, the carrier’s last full year of flying pre-pandemic, Eastern Airways lost £13.3 million on turnover of £38 million. That followed losses of more than £30 million in the 12 months to March 2018 – £9.9 million in operational losses and £20.4 million in exceptional items.

 

Eastern had also lost £9.6 million in 2017, after recording only a £110,000 profit in 2016.

 

That amounted to cumulative losses of more than £32.5 million in under a decade, almost half as much again as Eastern’s annual turnover in 2023-24, despite it having raised £9 million from asset disposals during the pandemic.

 

Orient Industrial Holdings owns property company Easternhill Estates, freight operator Eastern Shipping and vintage aircraft show promoter Spitfire as well as Eastern Airways (UK), Air Kilroe, Eastern Airways International and Eastern Airways Europe.

 

Its accounts to March 2024 record a turnover of £63.1 million but net loss of £4 million, so the company was hardly in a position to offer further support.

 

Business Travel Association (BTA) chief executive Clive Wratten warned the failure could have “a major effect on business and leisure travel”, saying: “Eastern Airways has been hugely valued by the business travel community.”

 

Wratten noted the impact “would fall especially on routes between the northeast and Aberdeen, and Gatwick and Newquay” and said: “This underscores the urgent need for regional investment in travel infrastructure.

“The loss of Eastern Airways further isolates key parts of the UK.”

 

Carrier compelled to refocus continually

 

Eastern Airways was headquartered at Humberside Airport and carried 1.3 million passengers last year, including on KLM Cityhopper services, charters and subsidised public service obligation (PSO) routes.

 

Co-founded by Bryan Huxford and Richard Lake, Eastern launched in December 1997 with scheduled flights between Humberside and Aberdeen when KLM UK dropped the route.

 

The airline acquired Manchester-based Air Kilroe in 1999 and took over 12 aircraft and routes from British Airways CitiExpress in 2003.

 

Eastern bought Manchester Airports Group 82% stake in Humberside Airport in 2012. Then in 2014, helicopter operator Bristow acquired a 60% stake in Eastern, refocussing the network on the offshore oil and gas industry and Aberdeen. It added the remaining 40% stake in 2018.

 

The airline added services between the Isle of Man and Glasgow, Newcastle, Belfast City and London City in 2017, and entered a franchise agreement with leading regional carrier Flybe which saw it expand on Scottish Highland routes in competition with Loganair – although these routes had been dropped by late 2018.

 

It also operated PSO-subsidised domestic routes in France, a flight to London City on behalf of BA and a PSO-funded service in Wales.

 

However, the Bristow Group sold Eastern back to co- founder Lake in 2019 and Flybe went into administration in March 2020.

 

Eastern sought to take advantage, opening a base at Flybe’s former Southampton headquarters and routes to Manchester and Newcastle, subsequently adding Belfast City and Dublin as well as Aberdeen, Leeds-Bradford and Teesside.

 

The airline launched flights to Gibraltar in 2021, with services from Birmingham and Southampton. However, both routes were cancelled within a year amid the stop-start recovery from Covid.

 

It also launched services between Cardiff and Belfast City but suspended these in 2022 when the Welsh government discontinued funding.

 

The carrier survived the pandemic and in March 2024 took over Humberside and Teeside services to Amsterdam on behalf of KLM, subsequently flying also from Manchester, Glasgow, Newcastle, Norwich, Bristol, Southampton and Cardiff. 

 

It appeared to have navigated its recovery from the pandemic. But clearly the support of parent Orient Industrial Holidays ran out.