Flybe offered multi-million deal as part of Ryanair bid
Flybe has responded to mounting speculation over a 100 million euro deal with Ryanair, confirming it has come to an "agreement in principle" over the takeover of short-haul routes that will strengthen the Irish operator's 694 million euro bid to acquire Aer Lingus.
Ryanair has offered the Exeter-based airline a cash consideration worth around £87 million to take on a number of Aer Lingus aircraft and short haul routes, in order to satisfy competition rules which would also enable Ryanair to focus on long-haul operations.
Media reports suggested that if deal goes ahead, Flybe would acquire up to 43 routes from Aer Lingus – almost half the Dublin-based carrier's short-haul network – and more than 10 aircraft and associated crew.
The possible transfer forms part of a package of concessions Ryanair has submitted to the European Commission, with a ruling anticipated next month. The concessions are intended to address competition concerns, where a Ryanair merger would create a monopoly.
Aer Lingus has resisted repeated attempts by 30% shareholder Ryanair to engineer a takeover.
Ryanair is offering to sell around 40 per cent of Aer Lingus' short-haul operations to Flybe, in a last-ditch attempt to prevent its takeover bid for the Irish flag carrier being blocked by the European Commission.
The outline agreement between Ryanair and Flybe provides for a new company to be incorporated, into which the relevant business assets – including the 100 million euros – and liabilities would be transferred and acquired by Flybe.
In a statement issued to the stockmarket yesterday in response to mounting speculation, Flybe said the deal had yet to be approved by its shareholders.
It said that any agreement would be dependent on the status of Ryanair's offer for Aer Lingus; the outcome of the Commission's deliberations on the competition aspects of Ryanair's bid; and the agreement of a timetable for the implementation of the proposed moves.
According to reports, in addition to the Flybe offer, Ryanair would give British Airways, part of International Airlines Group, the right to buy approximately half of Aer Lingus's lucrative Heathrow slots, which are used to provide services to Dublin, Shannon and Cork.
The announcement comes as Flybe plans to shed around 300 staff, including 95 in Exeter, as part of a turnaround plan aimed at returning the airline to profitability.
As part of its blueprint for new business growth, Flybe has formed a new division – Flybe Outsourcing Solutions. It comprises its engineering arm, Flybe Aviation Services, the Flybe Training Academy and the contract flying service it delivers on behalf of other European airlines and will focus on a complete service package to European airlines seeking to focus upon their long-haul operations.
Aer Lingus is due to release its 2012 results today.