The future of Southend Airport has been plunged into uncertainty after its owner Esken faced abrupt demands to urgently repay a near £200-million loan, the firm warned today.
Southend could end up suspending operations, according to Esken chair David Shearer, if lender Carlyle pushes ahead with plans to force through repayment of a £194 million convertible loan within days when it had been set to mature in August 2028. Shearer said he was “doing everything I can” to avoid this worst-case scenario unfolding.
Carlyle has accused Esken of flouting the terms of the debt deal, which was agreed in 2021, with breaches stretching back as far as November 2022. Esken denies this and has filed a defence in court in a legal battle over the loan agreement.
Esken warned the repayment demands would have "significant adverse implications" for the airport and would be "value destructive for all stakeholders." Its shares crashed 41% to 0.5p. The stock has fallen more than 90% over the past year.
Esken has been seeking a buyer for Southend Airport since June last year, after it warned on the stability of its finances. In 2022 the firm arranged a £50 million borrowing facility to keep its finances in check. But last year, Carlyle began legal proceedings against Esken over the alleged loan breaches.
If unpaid, the convertible loan will turn into equity, granting Carlyle a 30% stake and giving the firm a shot at pushing through a takeover of the airport. Carlyle, a $400 billion US global investment firm, has thrown shade on Esken’s management of the airport and believes it could run it more effectively. The firm already operates a number of other global airports including terminal 1 of New York’s JFK.
“Following repeated and continuing defaults under our loan agreement since 2022, Carlyle can no longer wait patiently, putting the position of its investors and the ongoing success of London Southend Airport at risk," a spokesperson said.
“Esken is financially distressed and is not in a position to support the airport’s full recovery and growth nor execute an orderly sale of the airport.
“We have made numerous proposals to Esken and the airport to secure the airport’s long-term future, and look forward to stable ownership of the airport by an experienced and financially strong entity.”
Shearer has hit back at Carlyle’s shock demands. He told the Standard: “It’s a bit of a surprise that this approach was taken now as we’re on the cusp of getting back to a sensibly operating airport.
“We’ve already made a public statement that it is our intention to sell the airport as it recovers and the first person to get paid when we sell is Carlyle.
“The sensible outcome is we continue to steer the airport to a successful sale…and then we can all move on.”
Southend was bought by Esken, formerly known as Stobart Group, in 2008 for £21 million. Since 2020, a string of airlines have pulled operations, including easyJet, Ryanair and Wizzair, after the airport was shut to commercial passengers during the height of the coronavirus pandemic. Of those three, so far only easyJet has returned, along with a new deal with Aeroitalia, with the two operators offering a range of European destinations including Paris, Milan and Malaga.
Esken, which also owned a renewables business that it sold in December, last year said airport revenues rose 8.7% to £25.5 million for the year to the end of February, while pre-tax losses narrowed slightly, from £35.7 million to £27.7 million.
