Lack of investment by UHI Perth among reasons for aviation firm's collapse

The Courier

2 days ago

A lack of investment by UHI Perth is among the reasons for the failure of a Perth aviation business with 28 staff, the administrator has claimed.
Based at Perth Airport, Air Service Training (Engineering) is one of the longest-operating civil aviation training organisations in the world.
The company entered administration on April 10 with debts of more than £1 million.
A new report by administrator Shona Campbell, of Henderson Loggie, provides new detail on the reasons behind the business failure.
The report said there had been a 'material' decline in student enrolments, particularly among self-funded international candidates.
This was attributed to tightening visa restrictions, licensing challenges and global market competition.
It also noted the failure to replace the income of a significant Middle Eastern military training contract.
There was the additional challenge of rising operating costs.
The lack of investment by UHI Perth was also emphasised. It stated there was 'limited capacity' to reinvest in training assets and marketing.
It adds: 'The business entered administration due to sustained financial losses, inability to replace major revenue streams, and a lack of investment required to remain competitive in a changing aviation training market.'
The report shows a decline in turnover during the 2023/24 year. Sales were almost £2m in 2022 and 2023 but revenue fell to £1.6m in the year to July 31 2024.
The 2023/24 year showed a large pre-tax loss of £359,000. The company continued to lose money in the 2024/25 year.
The administrator's report said: 'Management accounts for the period ending April 10 2025 showed turnover of £1.275m and a net loss of £172,354, resulting in the company becoming balance sheet insolvent.'
Directors, including UHI Perth principal Margaret Cook, who stepped down last month, explored a sale of the business.
The report adds: 'Once those negotiations failed to provide a satisfactory outcome, the directors concluded that the company was insolvent.'
After the administration started, UHI Perth provided funding to the administrator to allow some BSc courses to be completed to the end of the 2024/25 academic year.
However, the report notes 'there are a number of students that had pre-paid for courses, or whose sponsoring employers had pre-paid for courses, that have not been fulfilled by the company.'
The administrator arranged the auction of assets in the business, including helicopters. This auction raised a six-figure sum.
It is estimated that employees are owed £375,000 for redundancy pay in lieu of notice. More than £1 million is owed to unsecured creditors.
It is expected there will be a partial payment made to unsecured creditors at the end of the administration process.
A spokesperson for UHI Perth responded to the administrator's comments about lack of investment.
She said: 'UHI Perth provided support to AST within the limits of what was legally and financially permissible for a publicly funded charity.
'We are not permitted to use public money to subsidise commercial operations, including those of wholly owned subsidiaries such as AST.
'This meant that the level of investment required to reposition AST in a highly competitive and rapidly evolving global market was not achievable without significant external funding.'