London Southend Airport owner Stobart Group has recorded a smaller loss in its aviation division despite being severely hit by tumbling passenger numbers at its airports.
Passenger numbers fell 89.5 per cent to 124,500 in the six months between late March and the end of August as it was hit by a strict quarantine policy and the closure of Southend Airport to passenger flights for several months.
Aviation revenues fell by almost half to £13.5million compared to a 22.5 per cent drop in energy, with further pain caused by EasyJet closing its base at the Essex airport.
Passenger numbers at Stobart Group’s operations, which mainly centre on its London Southend Airport, fell 89.5 per cent in the six months between late March and August
It was still able to keep its logistics operations running without interruption though, and combined with lower marketing costs, the Carlisle-based firm said this helped the division to make a loss of £900,000 compared to £1.7million in the same period last year.
It added that a deal with Southend Airport and online giant Amazon to provide night-time cargo flights could be expanded in the near future.
Total revenues at Stobart Group declined by 28.9 per cent to £53.2million, and it posted a £77million pre-tax loss across its operations, with the majority coming from costs related to its buying of Stobart Air and Propius.
The business is looking to offload its Stobart Air division in ‘early course,’ stating that the firm’s outlook ‘has deteriorated significantly since the capital raise due to the continued quarantine arrangements in Ireland, with limited flights operating.’
Stobart Energy performed significantly better during the reporting period though it was damaged by the disruption in the construction sector and the shutdown of recycling facilities affecting waste wood availability.
It consequently imported more waste wood which was more expensive, and it was only able to supply 86.1 per cent of the same volume it did last year.
However, this allowed it to take the pressure off UK demand for the product and increase gate fee prices for those it supplies, though those prices were harmed by the restarting of construction activity happening when demand outpaced supply.
EasyJet announced the closure of its base at London Southend Airport in August
Responding to the results, chief executive Warwick Brady said: ‘Covid-19 has created unprecedented challenges for the group.
‘In response, we have taken decisive action to bolster liquidity, reduce cash burn and protect our long-term strategic objectives.
He added: At Stobart Energy, we are seeing a more consistent demand profile and have taken appropriate actions to ensure certainty of supply of waste wood for customers over the winter period to fulfil our valuable long-term supply contracts.
‘We remain focused on realising value for shareholders from Stobart Energy as a maturing, cash generative and stable business over the next 18 months and are considering all options to achieve this.’
The group has already announced that 10 per cent of its staff have been made redundant, frozen recruitment, furloughed more than half of its London Southend staff, and cut staff pay to protect its finances.
Stobart Group has said extensive health and safety measures have been implemented at London Southend, including sanitising stations every 20 steps and bio shields
Looking ahead, it maintains confidence that its relationships with Wizz Air and Ryanair will continue and passenger demand for budget airlines will recover quickly.
‘Given the significant year-on-year growth achieved in the years leading up to the Covid-19 pandemic, we are confident that we will secure additional deals with airlines once better visibility of passenger demand returns,’ the group remarked.
It also noted that extensive health and safety measures had been implemented at London Southend, with sanitising stations every 20 steps, bio shields, and a greater proliferation of contactless technology.
Shares ended the day 8 per cent higher at 20.15p.