EUjet collapse 'was on the cards for months'
31.07.05
The collapse of EUjet was on the cards for several months, aviation industry sources claimed today. The Shannon-based no-frills airline announced last Tuesday that it was suspending all flights, citing its parent company's financial problems as the reason for the collapse.
To the airline's tens of thousands of passengers, the news came as a shock. However, aviation industry sources were not as surprised. One said: 'Everyone in aviation knew last December this would happen and were just very surprised that the [Irish aviation] authorities did not pull the license last November or December on financial grounds.'
But Ireland's aviation regulator, which monitors the Irish aviation sector, has claimed that it had no knowledge of EUjet's problems before last week. And even last Monday, when it was publicly known that talks between the airline's parent company and its bank had broken down, the regulator failed to withdraw EUjet's license.
EUjet was set up by former Ryanair chief executive PJ McGoldrick in 2002. He sold the airline to Planestation last September. McGoldrick initially resigned as chief executive, but returned to the role earlier this year. The airline had 50 staff based at Ireland's Shannon Airport and 200 based at Kent Airport in Britain.
McGoldrick sent a memo to EUjet's staff last Tuesday saying: 'Whilst EUjet's operations from Shannon have exceeded all expectations, the underperformance of Kent combined with reduced aircraft availability, a high fuel price, the failure of the group to develop the cargo business, difficulties encountered with group property transactions and the unexpected withdrawal of banker support resulted in an irresolvable conclusion for the group.'
All operations at Shannon have ceased and 100,000 passengers in Britain and Ireland who had booked flights are left with refunds but no flights. Those who booked accommodation or car hire to go with the flights, could be left out of pocket.
The Irish regulator has drawn criticism for its handling of the collapse, but the regulator said that, prior to this week, the authority had been meeting with EUjet regularly and had no concerns about either the funding of the airline or the volume of passengers it was carrying. Since its relaunch in September last year, EUjet has flown 330,000 passengers and taken 450,000 bookings.
At these meetings, the regulator examines the progress of airlines against the business plans they supply when they apply for their license. If the regulator is concerned that an airline is not performing well financially, it first issues the company with a warning and then has the power to withdraw the company's license. to fly commercial aircraft.
The Irish regulator is also said to be 'seething' at suggestions that it was easier to get a license. in Ireland than it was in Britain and that EUjet would never have got a license. in Britain. Most of EUjet's flying activity was from Kent airport, but its license. was granted by the Irish regulator, not the British Civil Aviation Authority (CAA).
But the regulator received support from an unlikely source, Ryanair chief executive Michael O'Leary. He said the Irish regulator could not be blamed because there was just as many airlines going bust in Britain as there were in Ireland.
'None of them are any good at regulating. Once an airline is up and running, they always try and keep it up and running. And it's not like they can just pull an airline's license., if an airline's in trouble they write to them and say, "okay, lets have your proposal",' O'Leary said.
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