Wednesday, May 24, 2017

Ireland: Family almost lost home over pilot school collapse, politicians told; Oireachtas committee hears of financial troubles after Waterford company liquidated

The lives of dozens of young trainee pilots and their families were “devastated” when a pilot training college in Waterford collapsed five years ago after they had paid large sums in fees, an Oireachtas committee has heard.

Waterford-based Pilot Training College of Ireland (PTC) was wound up in 2012 with debts of €9 million, most of it owed to students. Kazakhstani national carrier Air Astana was its largest corporate creditor.

The Joint Committee on Transport, Tourism and Sport heard a presentation by Brian Kealy and Martina Kealy of the Pilot Training Action Group, established to support those affected by the company’s collapse.

They told the committee that, while they appreciated that PTC had been a private company which unfortunately had ended its life with no assets, they wished to highlight the “failure of a public body, namely the Irish Aviation Authority [IAA], to act much earlier”.

Ms. Kealy said at least one family had downsized their house to afford the additional fees to allow their son to continue his pilot training. Another family “nearly had their house repossessed” and had a “major row” with a bank.

Financial pressure

One couple had been under such financial pressure since their son’s “dreams were dashed” that their marriage broke up.

Another student had suffered a “stress-induced seizure” and would never be able to fly again, she said.

The action group said a range of complaints had been made by students and their sponsors to the Garda Bureau of Fraud Investigation, but no action had been taken to date. Mr. Kealy also told the committee the group had contacted the Office of the Director of Corporate Enforcement, but had never received a response.

The 60 or so students represented by the action group were among those most impacted and were owed €2.6 million. In all, some 300 students were hit by the closure.

Mr. Kealy told the committee the group believed the IAA had shown “excessive forbearance in allowing PTC to continue to operate”.

He said Freedom of Information disclosures showed the aviation authority had reviewed the company accounts of Shemburn, the parent company of PTC, which had a €1 million reported net worth in December 2010. It had not reviewed the group accounts covering its subsidiaries as well.

“A review of PTC’s own accounts would have shown a €2 million deficit at December 2010 and €3.6 million owed to students and a serious qualification of the accounts stating ‘these conditions indicate the existence of a material uncertainty which may cast significant doubt over the company’s ability to continue as a going concern’,” Mr. Kealy said.

‘Like Ponzi schemes’

He noted the director of safety regulation at the IAA had told the committee in October 2012 that many flight training companies were “like Ponzi schemes”.

“A review of the PTC accounts would have shown this to be the case,” he said.

IAA chief executive Eamonn Brennan told the committee in 2012 that the body regulates flight-training organizations in accordance with the European Union regulations for safety.

Flight training organizations were not bonded companies either in Ireland or the United Kingdom.

Mr. Brennan said the aviation authority examined whether such organizations had resources sufficient to maintain their simulators, aircraft and so on but did not consider the financial viability of such a company.

Original article can be found here:   http://www.irishtimes.com

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