The identity of the preferred bidder has not been revealed but the deal could pave the way for Air Kilroe to keep operating as an airline
Joint administrators from RSM UK are working on a deal with a preferred bidder(Image: Eastern Airways)
Hopes have been raised that part of the Eastern Airways business can be rescued after administrators struck an agreement with a preferred bidder , fresh documents reveal. Hundreds of jobs were lost last October when administrators were appointed to the Humberside Airport based airline, days after all of its flights were suspended.
The UK short haul specialist was plunged into difficulties after its key contract with KLM – which saw Eastern flying four aircraft for KLM Cityhopper – was cancelled “at very short notice”, leaving it with huge fixed costs. That included an unsustainable number of employees, triggering the loss of more than 290 jobs since administrators at RSM UK were brought in.
The group consists of two companies – Eastern Airways (UK) Limited (EAUK) and Air Kilroe Limited – and reports for each have now been filed by the administrators, outlining the chain of events leading to the group’s demise, as well as progress on a potential buyer. The reports serve up a glimmer of hope, telling how a preferred offer has been picked for Air Kilroe.
It also says Air Kilroe could enter into a CVA (Creditor’s Voluntary Arrangement), in which it would strike an agreement with creditors to pay a portion of its debts over a set period. After launching a sale process 10 offers were submitted by the closing date in December, which were whittled down to four competitive offers which were considered by the RSM UK administrators and the group’s secured lender Gordon Brothers.
The report says: “Following numerous discussions with all the interested parties and an assessment of the offers as a whole, the joint administrators identified a preferred bidder and an exclusivity agreement was entered into on 21 December 2025. The joint administrators are currently progressing with the offer from the preferred bidder. The proposed high level structure of the deal is agreed, but will be finalised in due course, including the position in relation to the employees of EAUK.”
An interested party, such as the bidder, could “rescue Air Kilroe as a going concern in order to keep operating as an airline” because the company could stay solvent and maintain its air operator’s certificate, which was only suspended by the UK Civil Aviation Authority, and not cancelled entirely. The news will also give hope to the hundreds of redundancies which were initially made.
After directors filed a notice that they intended to appoint administrators, 273 employees were made redundant, while 51 were retained “to ensure maintenance of the aircraft fleet as the company sought to rescue some or all of the company’s operations as well as remaining compliant with the relevant Civil Aviation Authority regulations”. Since then, a further 20 have been made redundant.
Meanwhile, the level of estimated debts has also been totted up, highlighting an estimated debt of £34.8m. A total of 16 pages of creditors for Eastern Airways UK Limited are listed, including airports around the UK and Europe. Sister company Air Kilroe, which holds the aircraft and CAA licenses, is its biggest creditor, owing around £21m, because all receipts and payments were made by Eastern Airways Ltd as Air Kilroe did not operate a bank account.
The report also tells how the company was a year into a seven-year contract to support BP Oils in flying between Aberdeen and Sumburgh on its owned aircraft fleet. It also operated Public Service Obligation services in Scotland, and also between Newquay and London between 2021 and 2024, and had tendered to carry on the southern service from November last year, but withdrew its tender after filing the administration note.
The Humberside Airport group also successfully operated charter flights for corporates including Premier League Football Clubs, Formula One Teams and private companies. But it was the KLM deal which accounted for 55% of its revenue, while also triggering job creation.
The report added: “The company had historically been profitable and had ambitions for growth. This included the signing of a contract with KLM City Hopper in March 2024 to provide services to the Netherlands, with additional flying to Manchester, Glasgow, Newcastle and Norwich. In order to service the KLM contract, the company had to expand their fleet of aircraft which was achieved by entering into lease agreements for aircraft as well as employing an additional circa 150 staff employed. In July 2025, KLM terminated the contract at very short notice with the last flights expected to be operated in October 2025.”