A protracted battle over the future of Southend Airport today drew to a close after owner Esken bowed to pressure from its biggest lender Carlyle and agreed to wind itself up in a move likely to leave shareholders empty-handed.
London’s sixth airport had been in the hands of Esken, formerly known as Stobart Group, after it acquired the site for £21 million in 2008. But Southend was hit hard by the coronavirus pandemic, with the airport being forced to close to passengers for months on end after a number of high-profile airlines withdrew operations.
Esken saw its stock tumble as it became saddled with hundreds of millions of pounds of debt amid a struggle to keep afloat. The company was dealt another blow in January after its main lender, US private equity group Carlyle, accused the company of having breached the terms of a £194 million loan and demanded urgent repayment.
Esken initially tried to shake off Carlyle’s accusation and dispute its legal basis, with CEO David Shearer telling the Standard the lender was “seeking to get their hands on the airport on the cheap,” adding that the legal threat could upend the airport’s operations.
But the firm today said it had reached a deal under which Carlyle would become the majority shareholder of the airport after admitting it did not have the necessary funds to fight the company in court.
The ailing business said it had made attempts to “conclude a new £20 million funding facility from certain of Esken's larger shareholders…[but] all progress was stopped in light of recent events.”
“While there could have been the opportunity to pursue other sources of finance given more time, Esken did not have access to the financial resources to sustain it through what would have involved a protracted court battle.
“The board has a responsibility to its creditors to ensure that it follows the appropriate course of action in these circumstances.”
Esken added that it would now begin a process of winding down and delisting from the London Stock Exchange, adding that “any return for shareholders at the end of the process is likely to be negligible.”
Carlyle, which also owns parts of New York’s JFK airport, will now become an 82.5% shareholder of Southend.
The firm said: “This transaction combines our financial strength and expertise with new funding to secure the airport’s long-term future for the benefit of all stakeholders and ensures the airport is well-positioned to thrive.”
The bitter dispute’s end draws a line over years of uncertainty surrounding the airport’s chances of survival. Other smaller regional sites have been shut since the pandemic, including Carlisle Lake District Airport, also owned by Esken, which has been closed to passengers since 2020, while Doncaster Sheffield airport closed permanently in 2022.
EasyJet which had been one of the airport’s biggest customers, said it would close its base there in 2020 but has since returned and now runs several flights weekly to major European destinations such as Paris, Geneva and Amsterdam, while Esken had been in talks to bring back other operators.
“The airport could probably accommodate six to seven million passengers…[and] there had been some preparatory work done on the next phase, which would target ten to twelve million passengers,” Shearer told the Standard.
“The one thing that neither of us disagree on is the potential opportunity for this airport, though we might have disagreed about how to get there.”
