The Shannon-based airline Skynet Airlines has suspended its Shannon-Dublin service due to lack of demand. Meanwhile, the company has filed pre-tax losses of €4.5 million for 2002.

The airline uses two Boeing 737s on the Shannon-Dublin-Moscow route and managing director Mr Paul Williamson said it had become uneconomical to use them on the Shannon-Dublin leg in the winter season. Both aircraft are leased.

He said the airline had tried to maintain the service but the load factors were simply not present. He said the company worked with chambers of commerce and business associations in the area to identify demand, but there was not enough to make a profit. The airline will review whether to restore a summer service in 2004.

He said Aer Lingus trans-Atlantic flights were picking up passengers in Shannon and flying them on to Dublin and this was reducing the pool of potential customers. He said the level of traffic generally between Shannon and Dublin was not significant from an airline viewpoint.

The airline will retain a presence on the Web in case demand increases. However, customers who booked flights for October and beyond will now be refunded. The airline operates two services: Shannon-Dublin-Moscow and Shannon-Amsterdam-Moscow.

Mr Williamson said that, despite the heavy losses for 2002, he remained confident about the company's business plans and new developments would be announced shortly.

He said the company expected to make losses initially but its two routes were performing well with healthy interest from Russian business people interested in the Irish market.

The 737s will continue to fly out of Shannon but they will not be carrying passengers for the initial leg. The aircraft were also available for occasional charter business, said the airline.

The idea of a Russian-Irish airline was the brainchild of former Aeroflot Shannon station manager Mr Boris Krivechenko. He continues to advise the airline, although the main investors are Irish, EU and American. While Aeroflot is a partner of the airline, it has no equity in the venture.

According to accounts lodged with the Companies Office, the company made a pre-tax loss of €4.5 million in 2002. It had net operating expenses of €6.3 million. The accounts were prepared on a going-concern basis and the company has continued to report losses of €2.3 million for January- March 30th of this year.

The accounts show that, since the end of 2002, the company's working capital requirements have been financed through shareholder investment and loans. The directors expect the company to become profitable in 2004. Shareholders are committed to providing at least €700,000 in the next year, say the accounts.