Published on June 24th, 2018 | by Mark Dwyer0
Trouble in the Boardroom at Stobart as Ryanair Announce Southend Base
The Stobart Group plc (owner of Stobart Air) AGM has been deferred from 28th June to 6th July when it will take place at 1100 in Guernsey. The Company announced that it has received a requisition from shareholders holding in excess of 33% of the Company’s voting capital to nominate Philip Day to be elected as a Director of the Company either at its forthcoming AGM or at a subsequently convened general meeting and to invite the Board to nominate him as Chairman. The shareholders comprise Andrew Tinkler, Executive Director and former CEO, funds acting through Woodford Investment Management Limited and Allan Jenkinson. Mr Jenkinson is a former Stobart director who sold the biomass business to the company when Mr Tinkler was at the helm.
The choice of Mr Day, a high street retail tycoon who rescued Peacocks in 2012 and also owns Edinburgh Woollen Mill, is an unconventional one for the company that split from transport and logistics group Eddie Stobart in 2014. The entrepreneur, who owns a castle in Cumbria but is now based in Dubai, is not believed to have served on the board of a public company before. Mr Day declined to comment. It is understood that he was asked by Neil Woodford, the founder of Woodford Investment Management and one of Britain’s best-known fund managers, to allow his name to be put forward for the job, rather than by Cumbria-based Mr Tinkler.
The Notice of AGM issued by the Senior Independent Director reiterates than if Andrew Tinkler succeeds in voting out the Chairman, the other independent non-executive directors intend to resign. But Mr Tinkler says more than 20 of the company’s top executives, 80% of the executive leadership, backed a letter calling for the current Chairman, Iain Ferguson, to resign. Mr Tinkler, who The Sunday Times reported was paid £5.6m last year, said he is launching his own lawsuit against directors including the Chief Executive, Warwick Brady.
Meanwhile, the Stobart Group has lodged a claim at the High Court seeking £3.8m from Tinkler and former director William Stobart. It is seeking the money for a tax payment linked with Stobart’s 2008 purchase of rail and civil engineering firm WA Developments, which was owned by Tinkler, then Stobart boss, and William Stobart. Stobart Group has paid the money to HMRC.
The Company announced last week that, following the receipt of comprehensive legal advice, it had served notice on Andrew Tinkler, summarily terminating his employment with the Stobart Group with immediate effect. Warwick Brady, CEO of Stobart Group, said “Mr Tinkler’s actions, particularly in recent days, have threatened to destabilise the Company and severely impacted my ability and that of my team to manage the business on a day to day basis and deliver the agreed strategy. This is against the interests of all of our shareholders.”
Stobart Group made a profit before tax of £100.6m in the year ended 28th February 2018, compared with a loss of £8m the year before. All the group’s operating divisions report increasing underlying EBITDA year on year, with Energy up 18%, Aviation 3,500% (from £0.1m to £2.8m following the acquisition of Aer Arann) and Rail 13%. Revenue increased from £129.4m to £242m, largely due to including Stobart Air revenue. The balance sheet remains strong with net assets of £406m, subject to the valuation of the Group’s property and £104m ascribed to intangible assets.
Chief executive Warwick Brady said the Energy division is now on track to achieve its growth targets and the company is focused on further improving efficiencies and margins. He said there are particular opportunities to develop the Aviation division. “Our strategy is based on unlocking the current London airport capacity constraints through our London Southend Airport by increasing passenger numbers and attracting more airlines as well as improving customer services by expanding our Aviation Services offering and, ultimately, building on our growing reputation. We also continue to enjoy strong performance from our regional airline, Stobart Air,” he added.
Chairman Iain Ferguson said Stobart Air has increased passenger numbers by 9% and continues to develop good relationships with Aer Lingus and Flybe.
Aer Lingus Regional Contract
Aer Lingus Regional, operated by Stobart Air, is to increase route frequencies in winter 2018, operating 20 routes from Ireland, with over 735,000 seats on its network. Routes from Dublin to Edinburgh, Glasgow and Newquay and from Cork to Manchester are to gain an additional 70,000 seats. Aer Lingus Regional currently (summer) flies up to 580 flights per week across its 25 routes throughout Ireland, the UK and France.
The Stobart Group Annual Report for the 12 months to 28th February notes that Stobart Air provided “up to 10% of Aer Lingus transatlantic traffic in the period” and says “the valuable franchise with Aer Lingus delivered one-third of the point-to-point traffic between the UK and Ireland”.
Stobart Air is likely to face at least two challengers when a contract to operate the Aer Lingus Regional service comes up for renewal in the next few years. New wet lease operator Hibernian Airlines and Cityjet are among those now eyeing business with Aer Lingus. Although, according to John Mulligan at the Irish Independent, Stobart Air is understood to be negotiating a three-year extension to its 10-year contract to operate the Aer Lingus Regional service. If successful, this would push the contract out to 2025.
In other franchise news, Flybe confirmed that the arrangement it has with Stobart Air for the Isle of Man- Liverpool and Manchester routes will end next year. With effect from 31st March 2019, both routes will continue on Flybe’s own 78-seat Bombardier Q400 aircraft from a newly-established IoM base. Stobart Air has been operating the Flybe routes to and from the Island for several years
Ryanair Announce Southend Base
Ryanair announced it will open a new base at Stobart-owned Southend, from April 2019, with 3 based aircraft and 13 new routes to 8 countries, with over 55 weekly round trips, including Alicante (5 pw), Barcelona Reus (2 pw), Bilbao (4 pw), Brest (2 pw), Corfu (2 pw), Cluj (3 pw), Dublin (2 daily), Faro (5 pw), Kosice (3 pw), Malaga (5 pw), Milan Bergamo (4 pw), Palma (4 pw) & Venice (4 pw), which will deliver 1 million passengers annually at London Southend Airport according to the airline. This is a five-year agreement, extendable to ten, and agreed on standard commercial terms according to Stobart Group
Carlisle Airport Problems
Stobart’s Carlisle Lake District Airport announced the deferral of flights operated by Loganair to Dublin, Belfast, and London which were due to start on 4th June, due to a shortage of Air Traffic Control staff. Passengers who were booked on the flights will be offered refunds or alternative transport from Manchester or Glasgow.
It is hoped to commence the flights 3rd September. Loganair’s MD Jonathan Hinkles said “This is hugely disappointing for everyone, especially our customers. We remain fully committed to our partnership with Stobart Aviation to commence regular commercial services from Carlisle Lake District in September”.