RSM Confirms Eastern Airways Liquidation After Rescue Bid Fails

RSM’s last buyer walked away in January. Now the 29-year-old UK regional carrier’s Jetstream fleet is being sold off piece by piece, and creditors owed millions may get nothing back.

RSM UK Restructuring Advisory has confirmed the liquidation of Eastern Airways, ending months of efforts to sell the 29-year-old UK regional carrier and its Air Kilroe parent company as a going concern.

Joint administrators Jamie Miller and Gareth Harris disclosed in a progress report published this week that a preferred bidder walked away from an exclusivity agreement in January, leaving no alternative buyer for the business. RSM is now realizing what remains of Eastern’s assets piecemeal, including a fleet of Jetstream 41 aircraft reported to be the largest remaining fleet of the type in the world.

Eastern Airways, legally incorporated as Air Kilroe Limited, was founded in December 1997 by Bryan Huxford and Richard Lake at Humberside Airport in North Lincolnshire, England. The carrier once flew more than 200 flights a day at its peak and served as a regional feeder for KLM Cityhopper’s Amsterdam hub, connecting UK cities including Humberside, Teesside, Bristol, Newcastle, Leeds Bradford and Glasgow.

That KLM contract proved central to Eastern’s collapse. KLM canceled the wet-lease arrangement, under which Eastern operated up to four Embraer E190s on KLM Cityhopper’s behalf, in July 2025, with the last flight under the deal completed Oct. 5, 2025. In its report to creditors, RSM cited “High fixed overheads and a staff base that was too high to be sustainable.” The administrators added that this, “combined with rising costs in the aviation industry, had left the company unable to generate sustainable cashflow and placed them under considerable financial strain.”

Eastern grounded its entire fleet and canceled all flights on Oct. 27, 2025, filing a Notice of Intention to Appoint Administrators. Miller, a partner at RSM, said at the time that “a majority of the 330 staff have had to be made redundant by Eastern.” He added: “Sufficient staff have been retained to provide ongoing service and assistance to Eastern’s valued customers, and to continue maintenance of the aircraft.” Miller said RSM “would welcome any interest from potential alternative operators, or those who may have an interest in the underlying assets.” Formal administration began Nov. 6, 2025, when the UK Civil Aviation Authority confirmed both Air Kilroe and Eastern Airways had entered the process.

RSM brought in Gordon Brothers Asset Ingenuity to market the business Nov. 10, 2025, backed by £700,000 in emergency bridge funding intended to mothball operations, retain key staff and keep aircraft maintained. The process drew seven indicative offers and four final bids. Administrators selected a preferred bidder Dec. 21, 2025, who paid roughly £286,000 — about $376,000 — as a non-refundable contribution and entered exclusive talks. That bidder withdrew Jan. 8, 2026, after RSM said it stopped providing further financing. According to the RSM progress report, “Despite the purchaser withdrawing from the exclusivity agreement, they remained keen to purchase the company, and significant time was spent providing additional information and attending regular meetings.”

With no going-concern sale in reach, RSM turned to selling Eastern’s assets separately. Nine unencumbered Jetstream 41 aircraft owned by Air Kilroe, per RSM’s progress report — described as the world’s largest remaining fleet of the type — were sold to an unidentified third party under a confidential asset purchase agreement, with an initial payment of £950,000 received so far in two tranches. A separate parts and components dealer paid $850,000, or roughly £629,000, for aircraft parts. Eastern’s other leased aircraft, including its Embraer E190s, E170s and ATR 72s, were repossessed by lessors, who are expected to face shortfalls against roughly £19.6 million in claims.

The financial picture for creditors is bleak. RSM’s report shows Santander, Eastern’s secured lender, is owed roughly £6.9 million and faces a shortfall, while HMRC’s preferential claim of £1.56 million is expected to recover only about 28 pence on the pound. The RSM progress report states that “Eastern’s unsecured creditors, owed approximately £20.17 million, are not expected to receive a dividend.” Employee preferential claims of roughly £388,000 are expected to be paid in full.

TheStreet reported approximately 290 job losses in the collapse, while RSM’s own progress report states 273 employees were made redundant prior to the appointment of administrators, with 51 retained to preserve the fleet and maintain regulatory compliance. After a further 20 redundancies left 31 staff in January, that number has since been reduced further to 16 employees, who are expected to leave once the asset-realization process concludes.

The shutdown severed regional connections across northern England and Scotland, including Public Service Obligation routes that received government subsidies to maintain service. Eastern’s Aberdeen-to-Wick and Aberdeen-to-Sumburgh routes, relied upon by North Sea oil and gas workers, ended immediately, as did its subsidized Newquay-to-London Gatwick link serving Cornwall. On the day flights stopped, the UK Civil Aviation Authority’s Selina Chadha, group director for consumers and markets, said: “We urge passengers planning to fly with this airline not to go to the airport as all Eastern Airways flights are cancelled.” The CAA added that customers should pursue alternative travel by other airlines, rail or coach, and noted that most Eastern Airways bookings were not protected under the ATOL scheme, meaning affected passengers must seek refunds through credit or debit card chargebacks.

Eastern’s collapse is part of a broader reckoning in regional aviation. Fellow UK regional carrier Blue Islands, which serves the Channel Islands, suspended operations in November 2025, within weeks of Eastern’s grounding. Internationally, Eastern’s failure came amid a string of 2026 airline shutdowns that includes Spirit Airlines in the United States, which canceled all flights May 2, 2026, after twice filing for Chapter 11 bankruptcy protection, as well as Mexico’s Magnicharters, Houston-based charter operator Starflite Aviation — whose air operator certificate was revoked by the Federal Aviation Administration in March 2026 over falsified pilot training records — Slovenia’s AlpAvia and Sweden’s H-Bird.

Eastern had been independently owned by founder Richard Lake since 2019, when he repurchased the airline from Bristow Helicopters, which had acquired a 60% stake in 2014 for roughly $25 million. Eastern also operated as a Flybe franchise carrier from October 2017 until Flybe’s collapse in March 2020, briefly operating under Flybe’s brand before resuming its own identity. For the fiscal year ending March 2025, Eastern reported revenue of £51.3 million, followed by a turnover of £36.2 million and a pre-tax loss of £1.84 million for the period ending Oct. 31, 2025, according to Business Sale UK; the airline’s debt had reached roughly £25.97 million as of its FY2024 filing. Profits had collapsed from £1.55 million to £454,000 as debt ballooned from £4.8 million, according to Consultancy.uk.