Eastern Airways fleet sold after rescue attempts fail, Gatwick slots surrendered

Eastern Airways, the UK regional airline that ceased operations in October last year, has had its fleet sold off following unsuccessful efforts by its administrators to rescue the carrier. The airline’s holding company, Air Kilroe, which holds the air operator’s certificate (AOC) for Eastern Airways, was placed into administration amid financial difficulties. The joint administrators, from RSM, initially pursued a rescue strategy by marketing the airline for sale as a going concern through a creditors voluntary arrangement.

During the administration period, efforts were made to maintain key operational conditions to protect the suspended AOC, including preserving maintenance regimes and retaining essential staff. The administrators received around ten indicative offers for the company and ultimately selected a preferred bidder, entering into an exclusivity arrangement. This led to an initial payment exceeding £286,000 (approximately $376,000) in December to cover ongoing costs, demonstrating some progress toward sale completion.

However, in January, the preferred bidder withdrew from the exclusivity agreement and ceased making payments, although interest from other potential buyers reportedly persisted. Due to tight timelines and substantial funding requirements, the administrators were unable to secure a deal for the sale of the company as a viable ongoing business. Consequently, the administrators decided to proceed with asset liquidation through appointed agents, including asset valuation specialist Gordon Brothers.

This asset sale has included Eastern Airways’ fleet of nine unencumbered BAe Jetstream aircraft along with associated rotables and spares. The deal, though confidential, has seen the signing of an asset-purchase agreement to sell these aircraft to an unrelated third party. The administrators disclosed that the initial payment of £950,000 has been received, with further payments expected in two stages. This contrasts with the book value of the aircraft and parts, which total around £21.2 million combined according to the most recent draft accounts from RSM.

Alongside the asset sale, Air Kilroe’s eight summer slots at London Gatwick have been surrendered. The timing of Eastern’s collapse coincided with the ‘use it or lose it’ rule for slot retention, severely limiting opportunities to transfer these slots. Despite contacting over 40 potential slot buyers, the administrators and Gordon Brothers concluded that the slot timing and a saturated market would yield no significant value, leading to their decision to relinquish them.

The suspended Air Kilroe AOC now faces revocation as the administrators no longer maintain the necessary conditions to uphold it following the cessation of operations and sale of key assets. Staffing levels have dramatically decreased since the airline’s shutdown, with an initial retention of 51 staff members to handle administrative and compliance tasks now reduced to 12, all of whom are expected to be let go once the asset disposals conclude.

Operational infrastructure such as a Jetstream 41 simulator, located onsite but owned by an external entity, has ceased operation since April. Although pilot training bookings had continued during administration, the simulator was running at a loss, prompting ongoing discussions regarding its future with the owner. This development reflects the broader dismantling of Eastern’s training and operational capabilities.

Eastern Airways’ failure to secure a buyer and the subsequent asset sales mark the end of a regional airline that had maintained notable operations within the UK's domestic network. The failure to capitalize on their slots at London Gatwick underscores the challenges facing regional carriers in retaining valuable airport access amid collapse. The Jetstream fleet sale and liquidation of spares also highlight the financial pressures and asset recovery attempts typical of recent UK regional airline failures.