AB Airlines, the British publicly listed company which operates a route out of Shannon, has been placed in administrative receivership and is in negotiation with a number of companies including Virgin Airlines.

When the Minister for Enterprise, Trade and Employment, Ms O'Rourke, granted permission to Virgin Express last year to operate out of Shannon, the AB Airlines chairman, Mr Brian Beal, called on her to review the decision. He warned that the arrival of Virgin at Shannon could lead to the closure of AB Airline routes.

After Virgin began operating a route between Shannon and Stansted, AB Airlines closed its Shannon-Stansted operation as well as its Shannon-Birmingham route which used the same aircraft. It still operates three flights per day between Shannon and Gatwick.

The company was placed in receivership on Tuesday but the Shannon-Gatwick route is unaffected. The company employs approximately 60 people at Shannon and 200 overall. If the receivers are unable to find a buyer, the company is likely to be declared bankrupt.

A spokesman for the receivers said Mr Peter Copp and Mr Geoff Kinlan, of BDO Stoy Hayward, who are acting as British High Court of Justice-appointed Joint Administrators, are "very confident" that new owners can be found for the Stansted-based airline. The airline's Shannon-Gatwick and Gatwick-Nice routes continue to operate and are heavily booked for the holiday season. The company's difficulties are in no way related to the arrival of Virgin at Shannon, the spokesman said. He said the company had carried more than 140,000 passengers between Shannon and Gatwick in 1998.

AB Airlines was founded in 1992 as a low-fares airline and floated on the London stock exchange last year in order to raise funds for new aircraft. Following the flotation the company was valued at approximately £25 million sterling (£21 million). However expansion plans did not work out and the airline suffered losses of £2.2 million sterling in 1997 and £10.6 million last year. An underwriting agreement that underpinned a £2.3 million placing aimed a securing the company's future collapsed recently and led to the company being placed in receivership. The company's shares have traded as high as 95p and as low as 9p. Trading in the shares is suspended.

A spokeswoman for Virgin said the company was not the only airline examining the possibility of purchasing AB Airlines. "It's early days yet. All we've done is gone and had a look at what they've got, basically."