[Article] Small airlines under pressure

Victor

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Skynet loses Eur 4.5m and suspends Dublin flight
From:ireland.com
Thursday, 25th September, 2003

The Shannon-based airline Skynet Airlines has suspended its Shannon-Dublin service due to lack of demand. Meanwhile, the company has filed pre-tax losses of €4.5 million for 2002.

The airline uses two Boeing 737s on the Shannon-Dublin-Moscow route and managing director Mr Paul Williamson said it had become uneconomical to use them on the Shannon-Dublin leg in the winter season. Both aircraft are leased.

He said the airline had tried to maintain the service but the load factors were simply not present. He said the company worked with chambers of commerce and business associations in the area to identify demand, but there was not enough to make a profit. The airline will review whether to restore a summer service in 2004.

He said Aer Lingus trans-Atlantic flights were picking up passengers in Shannon and flying them on to Dublin and this was reducing the pool of potential customers. He said the level of traffic generally between Shannon and Dublin was not significant from an airline viewpoint.

The airline will retain a presence on the Web in case demand increases. However, customers who booked flights for October and beyond will now be refunded. The airline operates two services: Shannon-Dublin-Moscow and Shannon-Amsterdam-Moscow.

Mr Williamson said that, despite the heavy losses for 2002, he remained confident about the company's business plans and new developments would be announced shortly.

He said the company expected to make losses initially but its two routes were performing well with healthy interest from Russian business people interested in the Irish market.

The 737s will continue to fly out of Shannon but they will not be carrying passengers for the initial leg. The aircraft were also available for occasional charter business, said the airline.

The idea of a Russian-Irish airline was the brainchild of former Aeroflot Shannon station manager Mr Boris Krivechenko. He continues to advise the airline, although the main investors are Irish, EU and American. While Aeroflot is a partner of the airline, it has no equity in the venture.

According to accounts lodged with the Companies Office, the company made a pre-tax loss of €4.5 million in 2002. It had net operating expenses of €6.3 million. The accounts were prepared on a going-concern basis and the company has continued to report losses of €2.3 million for January- March 30th of this year.

The accounts show that, since the end of 2002, the company's working capital requirements have been financed through shareholder investment and loans. The directors expect the company to become profitable in 2004. Shareholders are committed to providing at least €700,000 in the next year, say the accounts.

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Jetmagic's chief executive resigns
From:ireland.com
Thursday, 25th September, 2003

The chief executive of the Cork-based airline Jetmagic, Mr Patrick Raftery, has resigned from the company, it emerged last night.

Mr Raftery, who previously worked with British Airways for 13 years, tendered his resignation to the airline's board in recent days.

A spokesman for the company said while his resignation was accepted with regret, the decision was an amicable one. Another board member, Mr Terry Lidiard, becomes acting chief executive until a replacement is found.

Mr Raftery was a key figure in the setting-up of the airline and has been working on the project for two years. He was heavily involved in encouraging several investors to put money into the venture.

Among the investors are Mr Michael Foley, the former chief executive of Aer Lingus, and a company linked to the IAWS co-operative society.

The company has yet to file accounts but it is understood some losses will be disclosed as the airline is in its first year of trading.

It is understood Mr Raftery had been considering his options for some time. However, he was not available to comment last night on the reasons behind the resignation.

The airline is hoping to carry 200,000 passengers annually and operates services to Northern Ireland, Britain and continental Europe.

It was established by 11 Cork-based entrepreneurs, including Mr Foley, who was dismissed by Aer Lingus over sexual harassment allegations two years ago.

A large number of the shareholders are based in Cork or Munster. They include the property company Templefort Ltd and members of the Punch family, who are involved in manufacturing and distributing household and shoe care products.

A company called Matador Investments Ltd holds their share.

Mr Alex McCarthy, who is associated with the radio business, is also listed as a shareholder, according to documents lodged with the Companies Office.

The venture is funded entirely through € 5 million private equity stumped up by stakeholders.

Pitched firmly at the business traveller, the airline is hoping in the long term to locate a second hub in Europe.

The airline has a fleet of four 37-seater Embraer 135 regional jets and plans to acquire more.

dmeehan

are skynet going to continue the snn-ams-mos service?
are they flying an empty plane to dublin? that cant be very ecconomical