Stobart Group have parted company with its rail engineering division after suffering continual losses of almost £150 million.

The group, which owns Carlisle Lake District Airport, has confirmed today it has sold that section of its business to Bavaria Industries Group, a week after stating its intentions to leave the market during this financial year.

The aviation and energy infrastructure group said the initial cash consideration for the sale was £1,000, but it may receive additional consideration of up to £2.9m based on the outcome of a single legacy contract. The business has 188 employees.

The agreement is on a debt free basis involving Stobart Rail and also includes the transfer of specialist plant and equipment in addition to a three-month Transitional Service Agreement for certain back office services to support Stobart Rail & Civils in the immediate term.

Warwick Brady, Chief Executive, Stobart Group, said: “In June we set out our strategy which will see the Group focus its investment on our aviation assets, particularly London Southend Airport.

“The sale of the Rail & Civils business removes the obligation for the Group to fund the expected ongoing losses of the Rail business and is a first step in achieving our goal of focusing our investment on aviation.”

As at 29th February this year, it was confirmed that Stobart Rail Ltd had gross assets of £32.8 million and net liabilities of £11.8 million. The loss before tax for the financial year ending 29 February 2020 was £10.1 million.

The transaction will result in an estimated loss on disposal of £9m after costs, before any additional consideration which may be received.

Bavaria Industries Group is an industrial holdings company which was founded in Germany in 2002.

It specialises in the takeover and re-organisation of earnings-poor and/or unprofitable enterprises. In the process, it says it pursues three key objectives: Cutting costs, developing new sources of turnover revenue, and preserving as many jobs as possible.