School demise to drag students in limbo

The list could go on, :

  • Dutch Stella Aviation in a series of bankruptcies ending in april 2014;
  • in the UK amidst CAA warnings, Cabair in february 2012, formerly bankrupt as Cabair College of Air Training
  • in France, the EPAG (Ecole de Pilotage Amaury de La-Grange) in april 2013,
  • the ESMA (École supérieure des métiers de l’aéronautique) -or rather ESMA-HNA- twice bankrupt if not for Chinese investors, De Heerd Investments Limited (in 2006) then Hainan Group (in august 2013, also 48% Aigle Azur shareholder);
  • and in a lesser extent the SEFA (Service de la formation aéronautique) that merged into the ENAC (French Civil Aviation University) in january 2011 which currently operates "at industrial minimum".

This 6th of november, Sud Aviation Training (SAT) confirmed the trend in France, entering a one month receivership period at the end of which either a settlement or bankruptcy will seal the fate of the 49 students pilot group... and their estimated joint €500k.

Accountability - the 500,000€ question

With the student group willing to recoup their stakes (should SAT go out of business), the question arose: who is liable to refund its members?

Before answering "the school", let's consider the audit report that sanctioned SAT's first fiscal year : fullscreen

Out of 20 items (of which 3 were not applicable at the time of the report), one learns SAT failed to display compliance of 14 of them with regulation !

While some ORA (Organisation Requirements applicable) violations appear mild at first glance (like ORA ATO 120 and flight time not being logged in hundredth of hour), all of them fell under level 2 findings, reportedly:

"[...] established by the DGAC when any non-compliance is detected by the applicable requirements of Regulation (EC) No 216 2008 and its implementing rules, procedures and manuals in the organization or in the terms of the license or certificate, which could lower safety or hazard flight safety"_ref

DGAC - Paved with good intentions

Following this audit, the French Aviation Authority decided to revoke ATO accreditation give SAT a 3 months probation period to change its ways, concluding :

"Numerous discrepancies were found during the audit, asserting a lack of both professional maturity and enforcement in established procedures. The multiplicity of aforementioned discrepancies would be such as to put ATO certification into question. However [...] new Head of Training [...] firm will to improve [!]".

Changes must have been conclusive since SAT still operated to this day EXCEPT ORA.GEN.210 (a), financial viability, that proved non-existent.
Sources close to another ongoing legal dispute involving SAT confirmed:

"[...] SAT had a negative balance sheet of 140,000€ by the end of its first year [...]"

In other words, the DGAC tolerated deviations to rescue a business when ultimately said business was bound to leave its "clients" on the hook in what probably ended up as a ponzi scheme (a money sink, new entrants' money covering other participant's liabilities).

What scenario will unfold? Will DGAC bureaucrats man up should SAT bankruptcy occur? Will the students be offered a solution/recover their investment provided it hasn't vaporized? We're not holding our breath.

edit Dec 6th: and sure enough...

Posted by Cockpit Seeker

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