All flights have been grounded at Blackpool Airport following the news that a buyer for the site could not be found. The final flight departed on 15 October and an estimated 100 staff are to be made redundant.
Blackpool Airport had been trading at a loss of around £1.5million a year and had been put up for sale by owners Balfour Beatty with the hope of attracting a new buyer. The airport owed its parent company £19.2million, while creditors and suppliers of goods and services to the airport were owed an additional £2million.
Liquidators have now visited the airport to price up assets and equipment to sell at auction and repay the creditors.
Falling passenger numbers
In the early days, the airport flourished, with visitor numbers hitting a record high of 550,000 in 2007. However, when the global economic crash struck, a number of key customers were lost. Before long, Jet2 was the only major airline remaining and the airport began to operate at a loss.
Customer numbers dropped sharply in the following years with just 262,000 passengers in 2013. This figure was well below the number required to break even.
Despite the best efforts to secure a buyer, no “suitable offers” were received and the liquidators Zolfo Cooper were appointed.
An insolvency expert from Zolfo Cooper said: “We had a meeting of shareholders followed immediately by a meeting of the creditors, who appointed Zolfo Cooper as the liquidators. This was followed by a meeting with the employees where approximately 100 staff members were made redundant.
“Our job now is to realise the assets of the company and return money to the creditors. There are also debtors to contact for money they owe, insurance claims to settle and potential rates refunds.
“There was an amount owed to Balfour Beatty related entities in the order of £19.2million. There’s also an amount owed to unsecured creditors of £2million”.
Only a very small number of employees and a handful of security staff are being kept on to help the liquidators wind down the company.
Out of its depth
The one factor all those involved seem to be particularly perplexed by is the level of the debt the airport accumulated in a relatively short period of time. Councillor Tony Williams said: “Clearly the management of the airport was not working and has not been for a long time.
“The debt seems to be an awful lot and much more than the losses they had been reporting over recent years. It’s clear, as things unravel, Balfour Beatty was out of its depth when it comes to running an airport”.
Blackpool Council has also voiced its annoyance that Jet2, the airport’s largest airline, had not worked hard enough to draw in new routes and airlines.
Despite the best efforts of liquidators to find a buyer, no credible offers were received. When no deal could be struck, Balfour Beatty was left with little choice other than to shut down the organisation.
Managing company Insolvency Top tips
On the face of it, it does sound like Balfour Beatty should have sought an administrator’s help sooner and the construction company was operating out of its depth as the report suggests. Balfour Beatty is not the first company to have experience in one area and think that same experience can be applied elsewhere only to end disastrously.
- If the company is losing money and there is no obvious solution then seek professional insolvency help sooner rather than later – do not let pride get in the way of common sense
- Very often management will have exhausted every option and in doing so antagonised creditors who may have otherwise been supportive if brought inside earlier
- If your management team is out of its depth get sector experienced help in fast – knowing when to seek professional help is a sign of strength, not weakness
- Managing an insolvent company with often frustrated creditors needs a cool head experienced in insolvency matters – your accountant or lawyer is unlikely to be able to help in these circumstances unless insolvency specialists
- Rescuing a failing business is just as much about understanding what is right with the company as what is going wrong
- Liquidation is not always at the end of the company there may be parts of it that can be rescued in a different model
Keep up to date with all the latest company rescue, administration, CVA, liquidation and company debt advice at Jameson, Smith & Co. blog. Alternatively, please get in touch for a free, confidential discussion about your business’ financial position.