ICELAND/UK. Excel Airways Group Chief Operating Officer Steven Tomlinson and Chief Financial Officer Paul Roberts have resigned with immediate effect, parent company Avion Group has announced. The role of Chief Financial Officer will be assumed by Halldor Sigurdarson.
The moves come as Avion concludes its own investigation into the award of a catering contract to Alpha Airports Group. The corporate drama prompted the departures of Alpha CEO Kevin Abbott and Finance Director Heather McRae and led to Alpha’s shares being suspended. Alpha’s accounts have since been approved and its shares are trading again.
In its interim results announcement on 30 June, Avion said it would take steps to strengthen the management of Excel Airways in the aftermath of the investigation. Excel Airways made a US$10 million provision in its finances over the affair.
Avion also commented on the details of its internal investigation.
In a statement it said: “In Summer 2005, Excel Airways entered into agreements with Alpha for inflight catering services. This followed earlier discussions in which Excel Airways had informed Alpha that it was removing all its inflight catering services with a view to reducing costs. After Alpha had considered the implications of this on its business, Alpha approached Excel Airways and an agreement between Excel Airways and Alpha was concluded on the basis that catering services would be provided for a five-year term but subject to an up-front discount. This discount was agreed in the form of a credit note issued to Excel Airways in Financial Year 2005.
“An investigation initiated by the Board of Avion Group into this matter has concluded that the credit issued by Alpha should have been strictly applied against the term of the new contracts in accordance with the Group’s accounting policies rather than against services already received.”
This led to Excel taking the US$10 million prior year provision in its half-year statements, to reduce the credit in financial year 2005.
The company concluded: “Avion Group is taking steps which will strengthen the management of Excel Airways Group as well as establish an independent audit committee which will report to the Board of Avion Group. The Board emphasises that this is an isolated incident within the Charter & Leisure Division and the Group as a whole and that the performance of the Group remains in line with forecasts for the Financial Year 2006 with a forecast turnover of US$2,100 million and EBITDA of $165 million.”
MORE STORIES ON ALPHA AND EXCEL AIRWAYS
Alpha Airports Group’s share price bounces back following early tumble post re-listing – 10/07/06
Alpha’s nightmare over as company accounts are approved and shares relisted – 06/07/06
Excel Airways takes on US$10 million provision over Alpha contract investigation – 30/06/06
The Moodie Report PLUS – New Chief Executive backs Alpha to recover and grow – 02/06/06
