Troubled Highland Airways set to announce rescue package

SCOTTISH airline Highland Airways is close to a refinancing deal with Clydesdale Bank and Highlands and Islands Enterprise, Scotland on Sunday has learned.

The airline, which was forced briefly to suspend bookings in January before reactivating its online reservation system earlier this month, is expected to announce a rescue package over the next fortnight. It is locked in talks with its lender, Clydesdale, HIE and a new investor as it seeks to secure its long-term future.

There were concerns last month that Highland Airways was on the brink of collapse as the economic climate caught up with it.

The freezing weather at the turn of the year heightened the airline's difficulties as it prevented a number of services from taking off.

Basil O'Fee, commercial director at Highland Airways, said refinancing talks were "going well".

He confirmed that both Clydesdale and HIE were involved in a new financial package. But he added: "It'll probably be another couple of weeks before anything is signed off."

The identity of the third party investor remains a closely guarded secret, but Air Charter Scotland has previously been associated with a potential rescue.

Highland Airways, which operates as a lifeline service to many of the Scottish isles, was founded in 1991 as Alba Air.

In 2007 the firm, which is part-owned by HIE and Scottish Enterprise, was the target of a management buy-out. HIE invested 620,000 to support MBO. The agency provided a further 103,000 grant assistance in 2008 to support a fleet expansion.