What Stobart does
The London-listed group, which is planning to change its name to avoid confusion with the highly visible Eddie Stobart lorry firm, has been ramping up investment at the airport in recent years.
After selling its regional airline and aircraft leasing businesses as part of as the formation of Connect Airways with Virgin Atlantic, Stobart bought them back from the administrators in April after the collapse of the Flybe arm.
How it’s doing
In a trading update at the start of October, the company said it is trading much as expected at the time of its recent £100mln fundraising June.
The company said its London Southend Airport business is continuing to benefit from strong uninterrupted income through its global logistics operations and passenger flights that recommenced in June.
While passenger activity has been modest in the initial months since reopening in the summer, London Southend Airport remains well-positioned to benefit from the expected recovery in the short-haul leisure travel market as and when restrictions ease, Stobart said. Also, there is scope for further development of its logistics operations given the growth in online demand. The firm also expects slots at Southend vacated by easyJet will prove attractive to other airlines.
The Stobart Air division is also operating within the trading ranges envisaged at the time of the fundraising. The group is also actively engaging with a number of parties interested in acquiring its stake in the airline.
The group said it continues to operate with strict financial discipline to minimise operating cash burn and is deferring all discretionary capital expenditure until required to meet operational demand. As a result of these actions, Stobart Group’s overall cash flows are trading within the range of management expectations and the group had £119mln of cash and undrawn bank facilities available at the end of August.
The company also said in July that its wholly-owned subsidiary Stobart Holdings has divested Stobart Rail, owner of the group’s Rail & Civils division, to Bavaria Industries Group. The initial cash consideration for the sale was £1,000, but the company may receive additional consideration of up to £2.9mln based on the outcome of a single legacy contract.
What the CEO says: Warwick Brady
“The group is executing the strategy it set out at the time of the capital raise and is employing strict financial discipline to safeguard both the operational capability and the value of its core assets to ensure it will be positioned to respond to a recovery in demand.”
“We are delivering a cost-effective passenger-focused experience at London Southend Airport; we are reviewing the strategic options to realise value from Stobart Energy; we have exited the Rail & Civils business ahead of plan, and we continue to evaluate opportunities to dispose of remaining non-core assets.”
- Watch out for developments in the pivot to aviation
- New customers for airline slots at Southend
- A sale of the energy business in the next 18 to 24 months