Future of new airline EUjet looks under threat

TRADING in Planestation shares was dramatically suspended yesterday after the owner of Shannon-based airline EUjet said its bank had pulled the plug on extra funding for the group.

The company said its day-to-day operations would continue as normal and that EUjet flights operated on schedule yesterday. But it asked the Stock Exchange to authorise a suspension after shares plunged 8% and threatened to fall further.

Planestation, an airport operator that took over EUjet last year in a deal worth around 6 million, recently announced plans to ease cashflow problems by selling a 75% interest in a business park near Kent International Airport. But it emerged yesterday that its bank had decided against providing extra finance to support the company until the sale was completed.

“The company’s bankers were fully informed of the group’s position and the need for ongoing support and an extension of facilities whilst the disposal was completed,” a statement to the stock exchange said. “Until now, the directors had no reason to believe that support from its bank would not be forthcoming. However, discussions with the company’s bank over the last 48 hours have not been positive and the company has been informed that the bank is no longer able to support the company with additional facilities.”

Planestation said it would make a further announcement in due course and that it wanted to suspend trading in its shares until its financial position was clearer.

The company has struggled recently and saw 30% wiped off its share price last month after it said EUjet, which was set up by former Ryanair chief executive PJ McGoldrick, had failed to attract enough passengers and that the group’s cash requirements would be higher than originally forecast. It also warned it would need a series of asset disposals to generate enough cash to survive.

The share price began to stage a minor rally since, but hopes of a sustained recovery were dashed when the share price suffered a 15% hit last week after the company said its directors were “not aware of any reason” why the share price had climbed, quashing speculation that good news was on the way.