European court decision huge blow to Omega Air

The surprise rejection by the European Court of Justice of a case taken by Omega Air, the Dublin aircraft business owned by Messrs Des and Ulick McEvaddy, is a major financial blow to the company.

Immediate losses from the decision could be in excess of €35 million and the outcome is also a blow to potential business growth.

The brothers had been expecting to win the case after the Advocate General issued an opinion in their favour in September 2001. There was no immediate comment by Omega Air yesterday.

In 1999 Mr Ulick McEvaddy told the High Court in Dublin that Omega faced a €34.04 million (£26.8 million) loss if the EU regulation curtailing aircraft engine noise was introduced.

He added that his bank had told him it might not fund a further investment programme, worth more than €70 million, unless the EU directive was annulled or amended.

Mr McEvaddy told the court he had been lobbying politicians in relation to the regulation, which, he said, put the future of his aviation business in serious jeopardy.

The brothers have run up a €2 million plus legal bill fighting the regulation in the Dublin and London High Courts, as well as in the European court.

Omega, one of the world's largest owners and leasers of Boeing 707s, modifies older aircraft with "hushkits" and leases them internationally. However, the EU does not allow the registration of older aircraft with engines that have been modified to reduce noise.

Following the Advocate General's ruling, Mr Des McEvaddy said he felt Omega had a 90:10 chance of winning its case against the EU regulation.

Omega Air has Boeing 707s leased to airlines in Africa and South America. In the case of one of these being freed up, the company has argued, it is prevented by the EU regulation from leasing the aircraft to an airline servicing an EU member-state.

Omega Air has operations in the US and is a major stakeholder in Seven Q Seven Inc (SQS), which is based in San Antonio, Texas. SQS modifies or "re-engines" jet aircraft and last year it was involved in discussions with NATO about the possibility of upgrading some of its aircraft.

In October 2001, Aerospace Daily reported that Mr Des McEvaddy was involved in co-piloting test flights in San Antonio of a 707 that had been refitted with a new type of engine.

"We've proven that the 707 re-engined with the latest JT8D can meet or exceed all noise and emissions restrictions, and we hope that both commercial and military users of 707 aircraft worldwide take notice," Mr McEvaddy said.

Omega Air is also involved in leasing Boeing 707 in-flight refuelling tankers and has done business with the US Navy. According to a spokesman, the company has a small amount of such business and there was a "small uplift" in this sector following the US decision to attack Afghanistan.

Omega conducted a demonstration for the Marine Corps in March 2001, a spokesman for the US Marine Corps said earlier this year.

"Our commandant, Gen James Jones, is certainly interested in the concept of using a private contractor for some of our in-flight refuelling needs. One likely scenario would involve using Omega's services for our cross-country flights, including flights from the US to Okinawa, Japan.

"While its possible we'll be using more of Omega's services in the future, no long-term contractural arrangements have been made to date," the spokesman said.

The use of a private contractor in such a capacity is a significant development for the US military.

The McEvaddy brothers hit the news in 1999 during a controversy over their giving use of a villa in the south of France to the Tánaiste, Ms Harney, and the Minister for Finance, Mr McCreevy, who were on holiday with friends.