Flybe and Ryanair agree Irish airline deal
Exeter-based low cost airline Flybe has today (6th February) announced to the London Stock Exchange that it has agreed to acquire a new company, Flybe Ireland, from Ryanair for €1 million in the event of a successful bid by Ryanair for rival Aer Lingus.
Prior to its acquisition by Flybe, Ryanair has agreed to transfer to Flybe Ireland the following:
- 43 routes, all within Europe, many to or from current Flybe destinations;
- The requisite number of slots and licences to operate the routes;
- A minimum of 9 Airbus A320 aircraft;
- The requisite number of flight crew, aircraft engineers, management and facilities to operate the business;
- A cash injection of €100 million;
- All forward sales cash and liabilities, estimated at a further circa €50m in working capital funding.
Ryanair, in consultation with Flybe, has agreed to develop a one-year business plan to deliver a cost structure that, based on the assumption that the preceding year’s revenue remains the same, would provide €20 million in pre-tax profits in the 12 months following the transfer to Flybe Ireland.
In the event that the business plan does not project €20 million in pre-tax profits, there is an agreed adjustment mechanism factored into the €100 million cash contribution referred to above.
Flybe Ireland will operate from bases in Dublin and Cork and will operate 43 routes to 34 destinations in Europe, 50% of which Flybe already operates to in its UK business. It is proposed that the airline will have the right to use the Aer Lingus brand for up to three years post the transaction to allow it to develop its own brand position in Ireland during a realistic transition period.
Commenting on today’s announcement Jim French, Flybe’s Chairman and Chief Executive Officer, said: “Flybe would be delighted to be granted the opportunity to service the Irish aviation market through Flybe Ireland, an airline which would be based in Ireland and dedicated to developing a broad range of scheduled services for business and leisure markets.
“This development of creating a Dublin-based airline is in line with the Company’s stated strategy at the time of IPO – which was to diversify away from reliance upon the UK economy. The terms of the deal negotiated ensure that Flybe Ireland will be a well-capitalised, well-funded company, enabling us to deliver upon that strategic aim. Flybe has a history of acquiring businesses of scale, restructuring and refocusing them and as a result delivering profitable returns. This opportunity plays clearly to that corporate strength.
“Flybe would be proud to have the chance to serve the Irish markets, and would be, as we seek to be throughout the rest of Europe, a good employer and corporate citizen.
“However, before Flybe Ireland can come into being there are many hurdles to overcome, not least the EC accepting the remedies offered by Ryanair in its offer to take over Aer Lingus, and then the shareholders of Aer Lingus accepting an offer from Ryanair. However, Flybe has positioned itself well if these events come to pass, while in the meantime we continue to focus upon the delivery of the cost reduction and efficiency plan we outlined in January.”
