Flybe partner Finnair to buy Finland airline
02.07.11
Flybe and Finnair have agreed to buy Finland's biggest domestic airline, Finnish Commuter Airlines [FCA] for €25 million in a bid to create a major regional airline for the Nordic and Baltic countries.
The British airline, which has also agreed to buy 46 percent of Finnish Aircraft Maintenance, will pay €12 million for a 60 percent stake in the joint venture -- to be known as Flybe Nordic -- while Finland's flag carrier will pay €13 million for 40 percent. Flybe said its total investment would be €23.6 million including net cash and loan repayments.
Flybe Chief Executive Jim French said the deal was a good match for his airline, whose sub-100 seat aircraft operate on routes that are too small for the likes of Ryanair and easyJet, adding that FCA's similarities with Flybe included a vast number of cross-water routes with little competition from railways or road transport.
He told Reuters: ‘We're going after the whole Baltic regional market. We want to replicate in the Baltic regional market what we did in the UK -- linking secondary and primary cities. In five years I see the European side of [our] business being bigger than the UK business. The strategy is to use this vehicle [FCA] to create the largest and most profitable airline in that region.’
The purchase, which is still subject to competition clearance, will see Flybe take control of 15 planes which carry some 900,000 passengers a year. It will take over the day-to-day running of FCA from August 1. As part of the deal, Finnair will buy FCA's aircraft at market price and lease them back to the joint venture. Its investment will be around €104 million including the fleet's debt liabilities of €70 million.
Flybe intends to push the airline out to new markets including Sweden, Denmark, Estonia and Latvia and will introduce its low fare concept to the region. The new company will also be able to offer passengers Finnair’s extensive European and Asian network. Flybe will announce a new route network in August that will operate from October 30.
Mr French, said: ‘Finnish and Nordic passengers will see something very different from what has been available to them in the past. Flybe and Finnair have come together in a genuine partnership of equals that will bring huge benefits not just for Finnish passengers but also for the country’s economy.'
‘In establishing much-needed point-to-point routes, opening new bases in Finland, expanding into new markets - and in the process, becoming a recognised champion dedicated to the Nordic regions - the companies hope to create a brand new generation of Flying Finns!’
Mr French added that he is in discussions about ‘the replication this type of deal in other places’, with the ultimate aim to ‘join a few satellites in continental Europe and link all the dots so Flybe goes right across Europe as Ryanair and easyJet have.' He added: ‘There are a lot of smaller regional airlines who have seen the advance of easyJet and Ryanair, and they are looking for shelter.’
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