London Southend owner Stobart bullish on comeback
The boss of London Southend owner Stobart Group is optimistic that the airport will be among the quickest to see a recovery in passenger numbers after the coronavirus pandemic.
This morning the company revealed that numbers have dropped 89.5 per cent so far this year.
Most companies in the sector are predicting a return to pre-pandemic levels in 2024/25, but chief exec Warwick Brady said that a return by 2023 was possible.
He told City A.M. that Southend’s focus on the short-haul leisure market would position it well for when travel restarts properly.
However, he was realistic about the challenge that the new national lockdown, which begins tomorrow, would pose.
“The winter was always going to be hard but I think that this second lockdown will be devastating for the industry.
“Until we get airport testing and passengers can have certainty to book, it’ll be hell. It’s absolutely vital that we have it by the summer”, he added.
Brady added that the summer had shown how demand had largely held up despite the health concerns.
“As soon as you seen quarantine lifted, the demand is immediately there – everyone’s off flying to Portugal.”
He also welcomed the news that regional carrier Flybe, which Stobart used to own a share in, was making a return.
And he hinted there could be a role for the airline at Southend in the future.
“We’re really pleased to hear that Flybe is coming back. They are so important to regional travel in the UK and our previous plan was to have a London hub for them.
“We’ll talk to the new management and we hope that they will be able to play a part in that going forward”, he said.
Stobart takes £16m loss but cargo holds up
Stobart Group reported an underlying pre-tax loss of £16.1m in the first six months of the year, it was announced this morning.
The infrastructure company posted a loss just £600,000 worse than in the same period last year, despite the coronavirus pandemic.
Shares in Stobart Group rose over six per cent as markets opened this morning.
The London Southend owner said that while passenger numbers had shrunk due to the disease, its cargo operation had benefited from a lack of interruption.
In total, the group reported a loss of £77.4m, largely due to £55m non-cash loss on acquisition of Stobart Air and Propius.
Stobart is in the process of selling the division, with talks ongoing. As part of the process, it is engaging actively with parties interested in acquiring its stake and with Aer Lingus to enter a new commercial arrangement beyond December 2022 as part of this process.
Brady told City PM that the company hoped to have a plan in place by the end of the financial year.
Across the six month period the firm’s revenue fell a third from £69.3m to £46.7m.
Its aviation division saw revenue shrink 48.9 per cent to £13.5m, while Stobart Energy revenue fell over a fifth to £33.2m.
Although passenger flights resumed in June, the government’s travel quarantine policy meant that numbers fell 89.5 per cent over the period, to 124,500.
“Whilst passenger travel has been severely disrupted by lockdowns and evolving quarantine arrangements, London Southend Airport has benefited from uninterrupted income from its global logistics operation”, chief executive Warwick Brady said.
Analysts at Canaccord Genuity hailed Stobart Group’s “impressive” performance in an “unprecedented” situation.
“During the period it acted swiftly to bolster liquidity and reduce cash burn, in order to emerge from this crisis in the best possible position”, they said.
The group has £119.1m of cash and undrawn banking facilities following its £100m capital raise in June.