Stobart Group Ltd (LON:STOB) has confirmed it is in talks with the administrators of Connect Airways about possibly acquiring Stobart Air and Propius.
Dublin-based Stobart Air and aircraft leasing business Propius were both sold by Stobart Group last year as part of the formation of Connect with Virgin Atlantic and Cyrus Capital that also saw the acquisition of FlyBe.
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Stobart Group, which owns Southend Airport and a renewable energy division, said it “is reviewing all options […] including the possibility of acquiring the businesses from the administrators”, but said there is no certainty that any deal will take place.
With neither Stobart Air nor Propius themselves currently in administration, Stobart directors believe that with Aer Lingus as franchise partner the two units “have a viable future after (coronavirus) COVID-19”.
It said this would need to involve the “controlled” management of the impact of sale-and-leaseback guarantee obligations, including maintenance commitments and the franchise agreement with IAG’s Aer Lingus, together with fuel hedging obligations for Stobart Air that altogether “could potentially be significant”.
Stobart took on the obligations, which were scheduled to run off over a period of time, as part of the Connect Airways transaction last year.
Connect called in the administrators last month after the collapse of its Flybe arm due to a severe decline in demand because of the coronavirus (COVID-19) pandemic.