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The Board Of Flybe Group Reaches Agreement With Ryanair To Create Flybe Ireland In The Event Of A Successful Bid By Ryanair For Aer Lingus

6 February 2013

Ryanair To Provide €100M Of Funding To Establish Flybe As Major Competitor In Ireland


  • Flybe Group plc (‘Flybe’) made a major announcement to the London Stock Exchange today at 0700.
  • As part of this announcement Flybe confirmed that it had reached contractual agreement with Ryanair Holdings Plc (‘Ryanair’) over the transfer of a number of aircraft and operating routes as part of a package of concessions that Ryanair has submitted to the European Commission, in the context of its offer for Aer Lingus Group Plc (‘Aer Lingus’).
  • Flybe further confirmed:
  • If Ryanair acquired Aer Lingus it would transfer to a new company, Flybe Ireland:
  • 43 European routes; a minimum of 9 Airbus A320 aircraft;
  • the requisite number of  flight crew, aircraft engineers, management and facilities; and
  • the required number of slots to operate the 43 routes.
  • Ryanair will also capitalise Flybe Ireland with €100m of cash as well as the forward sales cash from the 43 routes.
  • Flybe would acquire Flybe Ireland for consideration of €1m.
  • Ryanair is also committing to deliver Flybe Ireland a cost base that should allow it to deliver solid profitability.
  • Flybe believes the transaction:
  • represents good value to shareholders;
  • is in line with company strategy; and
  • leverages the company’s proven skills in mergers and acquisitions, having previously successfully acquired BA Connect (UK, £350m turnover, 1,770 staff), and Finncomm (Finland, 500 staff, €100m turnover).
  • Flybe also confirms that it has already received irrevocable acceptances from 64% of shareholders in support of this transaction. 

A full summary of the announcement is provided at the end of this release.


There is no expected effect on UK employed staff. Flybe UK will continue to implement its ‘Delivery and Future Direction Strategy’ announced to the LSE on 23 January 2013.


There is no effect on Nordic employed staff.


Flybe looks forward to having the opportunity to serve the Irish aviation market. Flybe is proud of its track record as a good employer and corporate citizen. Flybe would seek to operate to the same values in Ireland.  Flybe has long standing trade union recognition rights, and developed consultation processes. Flybe currently serves Dublin from various points in the UK.

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.”




  • Flybe has agreed to acquire a new company, Flybe Ireland, from Ryanair for €1 million.
  • Prior to its acquisition by Flybe, Ryanair has agreed to transfer to Flybe Ireland:
  • 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 will undertake 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.;
  • Operate 43 routes to 34 destinations in Europe. Flybe currently operates to circa 50% of those destinations in its Flybe UK business;
  • Deploy Flybe’s frequency model on the major city pairs, and its leisure model on the European leisure markets;
  • Have the right to use the Aer Lingus brand for up to three years post the transaction. This will allow it to develop its own brand position in Ireland during a realistic transition period.


  • Flybe Ireland will be committed to operating an agreed frequency on routes, with the ability to terminate a certain number of routes per year whilst maintaining stable capacity in the Irish market.
  • If Flybe Ireland exceeds the route termination threshold, it will pay a contractual penalty.


Outlined below is the expected timetable:

  • March 2013
  • On 6 March 2013, EC is scheduled to give a decision on the competition aspects of Ryanair’s bid for Aer Lingus.
  • If the EC gives the agreement for Ryanair’s bid for Aer Lingus to proceed, Ryanair may then re-activate its bid with a view to gaining sufficient acceptances from Aer Lingus shareholders.
  • May 2013
  • If the Ryanair bid is reactivated and is successful, Flybe would expect the deal to close on or around mid May.
  • Summer 2013:
  • If the Ryanair bid for Aer Lingus has been successful, Flybe will undertake due diligence on the new entity.
  • It is expected that the Class 1 Circular will be completed and posted to Shareholders in August 2013, followed by an EGM for shareholders to vote.
  • October 2013:
  • The effective date of the transaction is envisaged to be October 2013 with Flybe Ireland commencing operations under Flybe’s ownership at the beginning of the 2013/14 IATA winter season.


The Board of Flybe believes that the transaction offers the following benefits to its shareholders:

  • As stated at IPO, the Group’s strategy is to diversify away from its reliance upon UK revenue. This opportunity is a good mixture of diversification, and overlap with our existing route network, to fulfil this goal.
  • Flybe has existing presence and network points at circa 50% of the 34 destinations in the 43 route package.
  • Flybe Ireland will be a well-capitalised company, with circa €150m of cash on the balance sheet, including the one off capitalisation by Ryanair, and the transfer of the forward sales cash within Aer Lingus at the time of the transaction.
  • Flybe Ireland will increase Flybe’s ability to drive further economies of scale from fleet basing, suppliers and airports, as part of this transaction.
  • Flybe has proven expertise in the acquisition and turnaround of acquired entities:
  • In March 2007, Flybe acquired British Airways’ UK regional airline, BA Connect, a business losing £40m per year at acquisition. The business was fully integrated into Flybe within 12 months, and made profits by the end of its first year of ownership. At the time of its acquisition the business had 39 aircraft, 1,700 staff and £350m of revenue.