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Thursday, 20 September, 2001, 16:13 GMT 17:13 UK
UK regional airline runs out of money
Gill Airways hostess
Staff had hoped the airline had overcome past trouble.
Newcastle-based regional airline Gill Airways has ceased trading after bankers withdrew financing.

More than 240 staff will lose their jobs at the company, which has been flying out of Newcastle Airport in north-east England since 1969.

The Bank of Scotland told company directors of its decision on Thursday morning.

Chief executive Malcolm Naylor said he was "shocked" at the decision, claiming the airline had enjoyed a period of profitable trading since being re-financed earlier this year.

This is a real kick in the teeth for our workers

Stan Abbot, Gill Airways

A spokesman for the Bank of Scotland said they regretted having to withdraw banking facilities from Gill Aviation, which they said had been under "financial constraint" for some time.

Difficult times

In a statement, the bank said: "In recent months Bank of Scotland has endeavoured to support Gill Aviation through difficult times, including support through an extended period of administration which Gill emerged from in April 2001.

"In August 2001, the company was given an opportunity to present fresh proposals with regard to its worsening financial position.

"Despite these proposals, sadly, the financial position of the company could no longer be supported by Bank of Scotland."

A Gill Airways spokesman revealed a "major blow" was suffered this week with "swinging" increases in insurance premiums which had added around 340,000 to Gill's costs.

An additional "onerous" requirement would have meant premiums being paid quarterly in advance at a time when cash flows were under pressure, said the company.

Fares increase

Mr Naylor told the BBC that like other airlines, they were about to put fares up to compensate for this - but now that the bank's funding had gone, there was no prospect of finding alternatives.

The board believed it could have overcome the current uncertainty in the airline industry caused by the terrorist attacks in the US.

Gill emerged from a period of voluntary administration in April, having seen an upturn in its fortunes after the Hatfield and Selby derailments brought chaos to rail travel.

Newcastle Airport
More than 200 workers at Gill have been sent home

Company spokesman Stan Abbot told BBC News Online: "We are absolutely devastated. The staff stuck with the company through thick and thin, and through the period of administration.

"The bank withdrew its financing and the directors had no alternative but to close down.

"This is a real kick in the teeth for our workers. I believe it is a panic measure brought on in the wake of the American terrorist acts last week."

The airline flew from Newcastle to Stansted Airport, Aberdeen, Paris, Belfast, Dublin, the Channel Islands and other destinations in Europe.

Gill said it had carried a record 35,000 passengers in August.

Liquidators informed

Mr Naylor said: "I am desperately disappointed for the loyal staff who have worked so hard during past difficulties, for this to happen at a time when they had every reason to believe they had a secure future in the business."

Gill said it was trying to make arrangements for its customers to switch to British European Airways flights.

Liquidators have been advised of the developments.

Christopher Darke, general secretary of the British Airline Pilots Association, accused the bank of acting "disgracefully."

See also:

20 Sep 01 | Business
British Airways cuts 7,000 jobs
20 Sep 01 | Business
Airbus freezes expansion plans
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