Airline which supplies daily newspapers to isles goes bust

Highland Airways, the airline responsible for taking daily newspapers to the isles, has gone into administration after finding it was unable to overcome severe trading difficulties.

It meant that apart from the Press and Journal, which is flown up by a different carrier, there were no daily newspapers on the stands on Thursday although talks are underway between Menzies Distribution and other airlines about restoring the supply.

The Inverness-based company called in administrators PricewaterhouseCoopers on Wednesday night to take over the running of the business.

The news followed “rigorous” efforts to save the beleaguered company, which announced it was in trouble earlier this year.

A statement from the Civil Aviation Authority (CAA) said the company, which employs 100 people and boasts a fleet of nine aircraft, was not expected to resume services in the near future. On Thursday all Highland Airways flights were cancelled.

Dave Sheddon, spokesman for Edinburgh-based Menzies Distribution which controls the flow of daily papers to Shetland, said discussions were underway with other airline carriers, but he could give no guarantee when daily paper deliveries might resume.

“At the moment we’re in discussions with other airline carriers, but we don’t have any outcome from that yet,” he said.

A statement was also released by Highlands and Islands Enterprise, which in 2007 invested £620,000 in the company to support a management buyout and provided a further £103,000 grant assistance in 2008 to support a fleet expansion.

The enterprise company received an interest payment of £41,780 in 2008 as a return on its original investment.

“We deeply regret that Highland Airways has been unable to recover from its difficulties, despite rigorous efforts to identify a solution,” the statement said.

“Our close dialogue with the management over recent weeks has provided a clear picture of options for all elements of its business and we are hopeful that other operators can be identified to take over Highland Airway’s routes and that passenger disruption can be minimised.”

The company came close to going bust in January following what it described as a difficult trading period brought about by the recession.

It was not helped by the bad weather at the time which prevented planes from taking off.

However hopes were high the company could be saved if discussions with a potential new suitor, which promised to bring strong synergies and new opportunities to the business, bore fruit.

In February it signed an exclusivity agreement with its mystery new partner, and opened up bookings for March at the same time, raising hopes the company could yet rise out of its financial mire.

Launched in 1991 as Air Alba, Highland Airways operated on many island routes in Scotland and Wales.

Highland Airways was not protected by the ATOL scheme administered by the CAA. The aviation authority said passengers who paid by credit or debit card should check with their card operator for further advice. Passengers who booked directly with the company will not be covered.