Flybe Agrees £100m Deal With Ryanair To Take On Aer Lingus' Irish Routes If Takeover Is Successful

Flybe has boosted Ryanair's hopes of a takeover of Aer Lingus by agreeing to a plan to fly 43 of the Irish carrier's short-haul routes.

The proposal is part of Ryanair's attempt to persuade the European Commission that its planned 694 million euro (£596.7 million) takeover of Aer Lingus will not harm competition for Irish passengers.

Ryanair has made two attempts to buy the airline before, but has been thwarted both times. On 28 January, chief executive Michael O'Leary issued a bullish statement saying he was confident this attempt would be successful.

"Ryanair has submitted a radical and unprecedented remedies package to the EU in support of its offer for Aer Lingus. We believe these remedies address every current Ryanair/Aer Lingus crossover route and all other competition issues raised by the Commission in its Statement of Objections," he said last month.

"The remedies involve two upfront buyers each basing aircraft in Ireland to takeover and operate a substantial part of Aer Lingus's existing route network and short-haul business. This will be the first EU airline merger which will deliver structural divestitures and multiple upfront buyers. We look forward to completing our offer for Aer Lingus, subject to receiving approval from the EU competition authorities in early March."

It's now clear that one of those upfront buyers is Flybe - under the new agreement, Flybe will receive a minimum of nine Airbus A320 aircraft and a cash injection of 100m euros (£85.9m) from Ryanair.

The newly created Flybe Ireland will operate from bases in Dublin and Cork, with many of the 34 European destinations served by the 43 routes already used by Flybe's UK business.

Ryanair will give Flybe the right to use the Aer Lingus brand for three years and will develop a business plan that should provide 20m euros (£17.2m) in pre-tax profits in the 12 months following the transfer.

If the takeover is approved, Flybe Ireland is expected to start offering flights in time for the winter season. The European Commission is due to give a decision on Ryanair's bid for Aer Lingus in March.

Flybe chairman and chief executive Jim French told the Press Association: "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."

Fighting talk

Aer Lingus meanwhile, has fought back, saying a takeover attempt by Ryanair would fail, adding that it's jump in profits in 2012 proved the airline could stand on its own.

"It seems to me so far fetched, this proposition, that we don't bother wasting our time on it," Aer Lingus chief executive Christoph Mueller told journalists in a conference call.

"We question very much that Flybe will be an independent competitor to Ryanair and we are working from the assumption that we will be around next year when we talk at Aer Lingus's 2013 results announcement," he said.

Mueller was speaking after Aer Lingus announced operating profit of 69.1m euros, up 40% from last year. That was slightly above a consensus forecast of 66.1m euros by seven analysts polled by Reuters.