Grounded Globespan axes 550 staff
Firm is owed £30million by credit card processing firm but refunds will eat up half of that sum
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Scottish low cost airline Fly Globespan made about 550 staff redundant yesterday after it went into administration.
The remaining staff – around 100 – have been kept on to help wind down the company over the coming weeks.
Bruce Cartwright of PricewaterhouseCoopers, who has been appointed a joint administrator, said the company directors did all they could to try to stop the firm from going under.
He revealed that the firm, which only owns one of the 10 planes it operated, is owed about £30million by E-clear, an online credit card processing company, but that sum is likely to be halved once refunds are made to passengers.
Mr Cartwright, who said his team were investigating why the money had not been passed to the airline, said it was not yet clear if the situation caused its demise.
He said that about 4,500 passengers are currently stranded in various European countries such as Spain, Portugal, Cyprus and Egypt.
About 1,000 are on package holidays which means they are covered by the air travel organisers licensing scheme and the Civil Aviation Authority will ensure they are flown home.
Some 3,500 people not covered must make alternative arrangements, however.
Mr Cartwright, speaking at a press conference in Edinburgh, said a number of other airlines are putting on extra flights at competitive prices to fly people back to the UK.
He added that passengers who used credit cards to pay for flights will be able to get a refund but not if they used debit cards.
Arrangements have been made to fly employees back to the UK from countries like India, Saudi Arabia and the Ascension Island.
Mr Cartwright said: “The directors believe they have done everything they could, and put all their effort into achieving a more favourable outcome than we see today.
“They are very focused on achieving the same aims we are, getting everyone home, getting passengers sorted out and doing the right thing.
“The employees have behaved with great dignity and behaved incredibly well considering the circumstances they find themselves in one week before Christmas.”
Labour leader Iain Gray said the collapse of the airline is a “terrible blow” to the Scottish aviation industry and urged the government to help find alternative employment for staff.
Liberal Democrat leader Tavish Scott echoed his comments.
First Minister Alex Salmond said the Scottish Government has civil servants on standby ready to assist staff.
He added that transport officials are working with airlines and BAA to identify alternative carriers to take over the company’s routes.
Mr Salmond said the UK Government must extend the existing protection scheme to include flight only bookings.
Multitrip.com, a direct travel insurance supplier, is urging consumers to ensure their travel insurance cover includes schedule airline failure and supplier failure cover.
A small clothing company is also counting the cost of Flyglobespan’s demise yesterday.
NKD Clothing won an £80,000 contract to provide the airline with all its staff uniforms earlier this year.
The Edinburgh-based firm had already provided Flyglobespan with £1,000 worth of pilot and crew uniforms and accessories for its biggest contract of 2009.
Director Gill Eastgate said: “We feel awful. We have had to call all our suppliers and apologise because after all their efforts we now won’t be able to place orders.
“This includes mock-ups and samples of badges, bespoke scarves and ties – all of which we will be billed for, so we will be out of pocket by several hundred pounds.
“The sudden collapse of the business is, of course, such sad and worrying news and our thoughts are with staff at Flyglobespan, with whom we have built a great working relationship to date.
“We are extremely disappointed and there is no getting away from the fact that as a small business we will really feel the effect of losing this contract.
“All in all, this news is pretty demoralising for us.”
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