UK’s Eastern Airways insists its future is secure

UK regional airline Eastern Airways (T3, Humberside) insists it has enjoyed a “strong and exceptional year” despite losses by its holding company and auditor warnings of “material uncertainty” facing its business. Local news reports said accounts for the airline signed off on August 6, 2020, include a bullish statement from owner and sole director Richard Lake, in which he highlighted the holding group’s “good mix” of business activities, “substantial” cash balance, “unencumbered” aircraft and no debt refinancing due, while talks were taking place with lenders “who recognise our strength of balance sheet and business model”. Lake founded Eastern in 1997, sold a co-owned majority stake to Bristow Helicopters (BHL, Aberdeen Dyce) in 2014 and repurchased 100% last year. Eastern’s parent, Orient Industrial Holdings of which Lake is the sole director, posted pre-tax losses of GBP284,000 British pounds (USD362,050) on revenue of GBP47.58 million (USD60.66 million) for the 11 months to March 31, 2020. These were the first figures for Orient since it acquired Humberside-based Eastern Airways in May 2019. Accounts published earlier this year for Eastern showed it was nearly GBP6.2 million (USD7.9 million) in the red during the 12 months to March 31, 2019, having recorded losses of almost GBP6.8 million (USD8.6 million) the year before, reported The Press and Journal newspaper. It said Orient’s accounts revealed one-off costs of GBP594,000 (USD758,115) in redundancy payments and GBP371,000 (USD473,785) in “early return” fees for Saab aircraft. Apart from the expected impact from COVID-19, the accounts also carried a warning that Brexit might reduce demand for flights to and from the UK, and affect Eastern’s ad-hoc charter business. “Aviation faces an uncertain future, with what could be a longer-term travel freeze and the risks of a slow recovery,” Lake said in his statement. “Orient…is undertaking significant measures internally to preserve cash and liquidity, as well as operational efficiency and cost savings,” he said. However, the newspaper quoted auditor John Taheny of Birmingham-based Bissell & Brown Chartered Accountants, saying that Lake’s confident outlook had assumed a phased increase in bookings and flights after August. The potential for further disruption due to COVID-19 meant there was a “material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern”, he said.