Airline in Alpha affair makes $10m provision

John Rimmer

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The parent company of Excel Airways, the airline implicated in the crisis that led to the suspension of Alpha Airport Group's shares, makes a $10m provision in Excel's financial statements

Excel Airways, the airline implicated in irregularities arising from a catering contract award to Alpha Airports Group last year, has put aside a provision of $10m in its financial statements as an investigation into the deal continues. The move was announced by Excel parent company Avion Group as it announced its results for the six months ending April 30 2006.
 
Alpha has admitted "consciously assisting" an unnamed client—widely rumoured to be Excel even before today's confirmation—"to put itself in a position in which it might have been able to manipulate its own financial statements" ahead of an initial public offering (RavenFox.com May 10). Concern over the deal prompted Alpha's auditor PricewaterhouseCoopers to withdraw approval of the group's preliminary results, leading to the suspension of trading in Alpha's shares and the resignation of CEO Kevin Abbott and finance director Heather McRae.

Avion insisted the $10m provision had "no effect on cash reserves, budgets and financial statements for current or future periods of Excel Airways Group and has no effect on its current or future earnings". It pledged to strengthen Excel's management team upon completion of the Alpha investigation.

Alpha declined to comment on Avion's announcement.
 
In addition to Excel, Icelandic company Avion Group also owns French charter airline Star Airlines and new German carrier Star Europe. It also owns aircraft, crew, maintenance and insurance provider Air Atlanta Icelandic. Avion today announced a loss of $72m against six-month operating revenue of $723m.