Futura seeks administration and suspends flights

PALMA AND LONDON
THE Majorcan-based Spanish charter airline Futura International Airways suspended flights for a day yesterday as it filed for administration, Spain's transport and infrastructure ministry said.

The airline is due to resume flights this morning after explaining to staff its reasons for the move, the ministry said.
No one from the airline, or Hutton Collins, the UK private equity firm which owns nearly half of Futura, was immediately available for comment.
Hutton Collins bought a 47 percent stake in the airline for about 60 million pounds a year ago.
Futura last month appointed restructuring advisers Houlihan Lokey amid falling profits, a source close to the situation told Reuters, adding that the firm was not overly indebted.

The global airline industry is seeing profits squeezed by higher oil prices, overcapacity and weakening demand. Futura might also have felt the impact of a fall in the number of British tourists visiting Spain this summer.

The airline has until September 12 to outline its financial situation, financial reorganisation and safety plan to the transport ministry, which will then decide whether to pass, suspend or revoke its flying license.

According to its website, Futura is Europe's largest independent medium-haul charter airline, flying a fleet of 38 Boeing 737s.
Futura chairman Roman Pane said at the airline's headquarters in Palma yesterday afternoon that the airline plans to reduce its staff of nearly 1'200 by half and trim its high-season fleet of aircraft from 22 to about 12 in a bid to reduce costs and restructure the airline.

The airline will have five aircraft in operation over the winter.
The news comes as a blow to the local airline industry. Palma-based Spanair has also unveiled drastic cuts in its workforce as part of a major cost cutting exercise.

600 of Futura's 1'211 staff work here in Palma. “Today is a day of transition and the only reason we decided to suspend operations for 24 hours was to give us time to plan and draw up our petition for creditor protection for the Civil Aviation Authority,” he said, and admitted that company directors are “worried” about the airline's economic situation which he blamed on “problems with demand and the sharp rise in fuel prices.” “We are going to have to come up with some innovative ways to maintain the company's viability and every step of the negotiations is going to involve the workforce. If there's no agreement with them, there's no viability plan,” Pane said.

The airline's Irish-based subsidiary Futura Gael said yesterday that it has ceased operations because of financial difficulties.