Travellers hit as Scottish Flyglobespan airline goes bust

Published on Wednesday 16 December 2009 21:42

SCOTTISH airline Flyglobespan has been grounded after its parent company collapsed with the loss of nearly 800 jobs, hitting over 100,000 passengers.

• Flyglobespan's demise comes only days after the company was said to be on the verge of a new funding deal. Picture: Complimentary

Seven Flyglobespan flights had been due to depart from Scotland today. But administrator PricewaterhouseCoopers (PwC) said last night: "Flight operations will cease from this evening."

Some 5,000 passengers had been due to fly with the airline over the next few days.

Passengers are advised to call a helpline today for the latest advice and visit the website for further information in the meantime.

A reported 27,000 passengers have future flights booked through the Atol insurance scheme, and around 90,000 have forward bookings but have no Atol protection.

The Globespan Group operates ten aircraft, and Gordon Dewar, managing director of Edinburgh Airport, which handled 650,000 Flyglobespan passengers a year, said: "This is a sad day for the Scottish aviation industry.

"However, our immediate attention must turn to the thousands of passengers who were due to fly with the airline over the coming months.

"We are already holding urgent discussions with a number of other airlines and are hopeful of replacing much of the capacity that has been lost from Flyglobespan going into administration."

Other airlines serve 20 of the total 24 routes used by Flyglobespan, which should help with bringing passengers home.

Travel agents described the demise of 35-year-old Edinburgh-based Globespan Group as a disaster for the Scottish trade.

Glasgow Airport managing director Amanda McMillan said: "We are desperately sorry for the many hundreds of Flyglobespan staff who are affected by today's news, many of whom have given years of service to the airline and to Scottish passengers.

"We appreciate that many Scottish holidaymakers will also be impacted, and we will do everything we can to help passengers."

Flyglobespan, set up in 2002, is expected to follow the group into administration today.

Joint administrator Bruce Cartwright said the group had been unable to secure extra funding and decided it could no longer operate. Most of the 800 staff would be made redundant, but a small number would be retained to help wind down the company.

He said: "We are acutely aware of the distress this situation will cause those travellers who are currently abroad, as well as the impact on those holidaymakers who have booked travel for later this year or 2010."

More than 1,000 people are overseas on Flyglobespan holidays at the moment, and about 27,000 have future bookings.

The Globespan collapse came days after chairman Tom Dalrymple said he was close to a new funding deal, which he described as "good news for the company, our customers and our staff".

However, Mr Cartwright yesterdaysaid: "Despite difficult trading conditions, the company has successfully implemented a number of steps to refine operations and focus on core profitable business.

"Unfortunately, a lack of confidence in the sector following the demise of other airlines resulted in a reduction of liquidity to fund the ongoing operations.

"The directors have sought to overcome this lack of liquidity by seeking additional funding from a third party in recent weeks, but this has ultimately been unsuccessful. The directors have therefore concluded with regret that the business can no longer continue to operate.

"Unfortunately, I am obliged to confirm that the group will no longer be able to operate flights.

"Our focus right now is on assisting those passengers who need to complete return journeys and communicating with those who have future reservations."

There were reports last night the firm was owed 35 million by two credit card processing firms.

Another Globespan Group company, Alba Ground Handling, which runs baggage operations for airlines at Glasgow, including Flybe, was also placed into administration. It is understood other firms will take over its work.

Four Flyglobespan flights from Glasgow, two from Edinburgh and one from Aberdeen had been due to depart today,

but PwC warned passengers not to turn up. A spokeswoman said: "Unfortunately, there is no prospect of their planned flight taking place."

A helpline will be open from 10am today on 0871 271 9000.

The Civil Aviation Authority (CAA) will be responsible for the repatriation of those who have booked flights as part of a Globespan package holiday, through the Air Travel Organisers' Licensing (ATOL) scheme.

Passengers who booked through a travel agent were advised to contact the agent in the first instance. Those who booked Flyglobespan flights directly via its website or call centre are not protected, but those who paid with a credit or debit card were advised to contact their card issuer.

PwC said Flyglobespan passengers already abroad would need to make their own arrangements to return to the UK using alternative airlines. Some may offer "repatriation" fares.

Travel agents said the collapse was a major setback. Scottish Passenger Agents Association president Brian Potter said: "This will have a devastating effect on the Scottish travel trade. It is a great shame.

"However, it had been teetering for some time and the speculation had been damaging.

"The feeling in the trade was that it was finished."

A spokesman for the Scottish Government said: "This is extremely disappointing news. The Scottish Government is contacting the company as a matter of urgency to seek clarification on the situation."

From best to bust in seven years

SET up in 2002, Flyglobespan operated from five UK airports – Prestwick, Edinburgh, Aberdeen, Cardiff and Belfast.

With a fleet of ten aircraft, it flew mainly to tourist destinations such as Orlando and Tenerife. Employing about 600 staff, last year it carried more than 1.5 million passengers and operated 12,000 flights.

Recently, Flyglobespan won a "Best Holiday Airline" award at the Scottish Passenger Agents Association Awards.

On Monday, its founder, Tom Dalrymple, predicted "good news" of an imminent funding deal after speculation that the company was headed for serious financial trouble.

Earlier this year, the airline pulled its services out of the Durham Tees Valley airport, blaming the worsening economic climate, while in 2007 it was forced to shell out 13 million on "unreliable" leased aircraft.

Low-cost airline Ryanair issued a "rescue fare" last night for passengers flying to and from Edinburgh and Prestwick who are affected by the collapse.

Earlier this year, the company announced it had made an operating profit of 1.2m, following a loss of 19m the previous year.