Flybe and Ryanair to create new airline

[Whiskey Charlie]

An interetsing development this morning for Flybe particularly, is it wise for them to get involved with Ryanair?

From the Telegraph:

Flybe, the loss-making British airline, and Ryanair have agreed to create Flybe Ireland, if the Irish low-cost carrier's bid for rival Aer Lingus is successful.

Flybe said on Wednesday the two had reached agreement over the possible transfer of aircraft, staff and routes.
The deal is part of Ryanair's attempt to win approval from the European Commission for its third attempt to take over Aer Lingus. The airline needs to make concessions to ensure Irish air travel remains competitive.
Flybe said it would pay Ryanair €1m (£866,000) for the newly created airline.
The deal would see Ryanair transfer to Flybe Ireland 43 European routes, at least nine Airbus A320 aircraft and an undisclosed number of flight crew, engineers, management and facilities to operate the business.
The Irish low-cost carrier will also provide Flybe Ireland with a cash injection of €100m and forward sales cash and liabilities worth around €50m.

"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," said Flybe chief executive Jim French.
Flybe said the deal was would move the airline away from its reliance on UK revenue and Flybe Ireland would start with around €150m of cash on the balance sheet.
However, Mr French added: "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."

[daynehold]

The present success of Ryanair is probably unquestionable and the company has a thirst to further develop but "commercial agreements" carry risks so always bear in mind the words of Julius Caesar:

"Yond Cassius has a lean and hungry look;
He thinks too much: such men are dangerous.".

Julius Caesar Act 1, scene 2, 190–195 (http://www.enotes.com/jc-text/act-i-scene-ii?start=2#jul-1-2-196)

[Aksai Oiler]

... So what's the new name FlyLo ? FlyAer? RyanBaer?

[Tooloose]

Great. Ryanair sets up a new airline, provides it with 43 routes €100m, 9 A320s, pilots, cabin crew and all required engineering and ground staff. This airline will then operate to a business plan designed by Ryanair. And MOL calls it competition?

Does anyone believe that it will be independent?

[Lord Lardy]

So what's the new name


'Pie in the sky' would be appropriate.

[Bigt]

9 A320.......??

[Sober Lark]

Lilliput is a fictional island supposed to be in Lough Ennell in Co. Westmeath just a field or two away from Gigginstown, home of Michael O'Leary. My suggestion for a name for this new airline would be 'Air Gullible'.

[Blind Squirrel]

Lilliput is a fictional island supposed to be in Lough Ennell in Co. Westmeath...


No, Lilliput exists. It's the area at the southwestern point of the lake, where the River Brosna exits. Jonathan Swift (Gulliver's Travels) had a country house there in 1726, hence the name.


Lough Ennell at Lilliput | Flickr - Photo Sharing! (http://www.flickr.com/photos/sherwoodh/5019027717/)

[virginblue]

I think it would be more correct to say that FR and BE are offering that Flybe will set up an Irish subsidiary with the support of FR in exchange for an anti-trust clearance for FR's proposed takeover of EI.

That is quite different from "Flybe and Ryanair to create a new airline".

[Sober Lark]

Someone in the PR dep working overtime again Squirrel?

You're burying so many nuts you can't keep track of them all these days ;) Thanks for making the connection between Gullible and a fairy tale.

[Blind Squirrel]

I can quite see what's in it from BE's point of view. They get a hundred and fifty million from FR in cool green in exchange for a one million "investment." Even if the new "airline" goes belly-up in short order, the break-up value will be a lot more than what they've put into it. Win-win situation for them.

But one would want to be more than usually credulous, however, to see this as meaningful "competition" to FR. Why would a far smaller outfit than the currently-existing EI, created as an all-too-evident Potemkin village by its giant parent, be expected to last more than a few years at best? And once it goes the way of all flesh, FR will then enjoy an effective monopoly over the Irish market, all for a mere hundred and fifty mill (slightly less than three months' net profits).

Got to give them credit for brass neck, though.

[Blind Squirrel]

Lark: Personal knowledge. I used to fly-fish there, back in the day. Mind you, this was when Ennell was suffering from the worst eutrophication problem of any waterway in western Europe, when my time would as profitably have been employed flogging a wet runway.

I understand it's a bit better these days, as a result of the farmers on the Westmeath side no longer being allowed to spray liquid pigs**t on their fields within a defined radius of the Brosna.

[airnoc]

Just wondering if this deal is soooooooo good for Flybe Ireland.

Why wasn't Aer Lingus offter it and keep the two irish airline togeather in Ireland because MOL claims that Aer Lingus w'ont into the further and was it not better for every one involved that this would be done beside pumping up a loss making airline

[MCDU2]

Whats the market cap of Flybe these days? Less than a 100m I would guess. AL has net cash of many times that. So buy 51% of Flybe or whatever it takes to get control and then the FR "remedies" package is dead in the water.

Shame though that it will waste more money getting rid of FR. In todays prelim results I think it was €10m spent this year alone defending the takeover. Probably not much change from €50m in total so far.

[FR-]

Good luck trying to buy 51% of Flybe.

Rosedale Aviation Holdings (69%), I dont see them willing to sell.

fr-

[Rivet Joint]

Hope this doesn't come to fruition or more to the point that the authorities let MOL get his hands on EIN.

The mere idea that MOL has the Irish consumers best interests at heart is laughable. This is the guy who even tells his own customers where to go! I sincerely hope that the many people he has crossed over the years will be serving a bit of revenge on him and block him turning Ireland into Ryanair Island :yuk:

Can you imagine what kind of position the Irish airports will be in when MOL is in charge of 95% of the country's traffic :eek:

[BHD2BFS]

If FR get their hands of EI does this mean the end of longhaul?

[davidjohnson6]

Rosedale Aviation Holdings (69%), I dont see them willing to sell.FR - you may be interested to know that Rosedale / Jack Walker Trust hold approx 48.1% of the shares as of 1st June 2012 and not 69%
I grant you however that even though 48.1% is technically a minority, it would be extremely difficult to mount any kind of takeover bid for Flybe without Rosedale's consent

Source - http://www.flybe.com/corporate/pdf/Flybe-Group-plc-Annual-Report-2011.12.pdf

MCDU - current market capitalisation of Flybe with share price at 54 pence is £40.6m - yes, 40.6 million pounds

[PAXboy]

On reading the thread title when it first appeared in the forum - before opening it - I thought: It's a bit early for April 1st. :p

[racedo]

FR - you may be interested to know that Rosedale / Jack Walker Trust hold approx 48.1% of the shares as of 1st June 2012 and not 69%
I grant you however that even though 48.1% is technically a majority, it would be extremely difficult to mount any kind of takeover bid for Flybe without Rosedale's consent

BA also has (had) a shareholding on approx 16%.

[rowly6339]

Does anybody really think this will happen, i just can't see FR being allowed to take over EI.

[Ondale]

Flybe have taken a big risk on this one - If the EU give the go ahead flybe (allegedy) get 3 years cash and then have to compete with Ryanair. If it does not get the go ahead they have p*ssed of Aer Lingus who may sense blood against a weeker Airline - Flybe's dublin routes would be in the spotlight and who knows what else...or maybe after all this goes away Flybe and Aer Lingus kiss and make up and become a partnership on short haul european routes...

[Laasjet]

This forum has a number of FR supporters who regularly put forward reasoned views on the airlines maneuverings.

Perhaps it is now opportune for them to reveal how MOL's latest brainwave will benefit the Irish economy?

[Sober Lark]

Airlines don't have any social responsibilities and only exist to serve their shareholders. Protection of the ordinary Joe Soap is down to the EU and competition law.

[Laasjet]

Well said.

One tends to pass over the rantings of MOL but two particular utterances in the past have always stuck in my mind.

The first was, we will create 4000 jobs.......... after we have made 4000 redundant.

Looking out of his window in Dublin at an Aer Lingus sign and saying those.............., I will close them down.

Certain words have been deleted for those of a sensitive nature.

Let us hope that the EU Commissioners have, at least, half a brain.

[Sober Lark]

Once there is free entry and non collusive behaviour among the participants then there is competition. Even a small amount of imperfect information could have a significant effect on competition and personally I think the EU will find the assumptions objectionable.

[McBruce]

Make no mistake, this is to dispose of Aer Lingus SH plus the high cost staff associated with it.

I can only see FlyBe wrapping up the business and cashing in on the assets once its drained some cash from Frenchies pocket.

[sunday8pm]

It means the beginning of FR long haul. £250 rtn to JFK from STN, EMA, MAN using EI aircraft. And they'll fill every single one of them.

It'll mark the beginning of FR doing to long haul what it has already done to short haul.

(All conjecture of course)

[Zag23]

" It means the beginning of FR long haul. £250 rtn to JFK from STN, EMA, MAN using EI aircraft." Would it not be easier and cheaper to buy some new A330's for these routes to JFK if ryanair really wanted to go long haul? :ugh:

[sunday8pm]

True, but this may well be a case of killing two birds (pardon the pun) with one stone. The theory is that FR will use EI to test their model long haul. Why pay for new aircraft to fly an operation that is a gamble. This way they buy an existing business to test it on and knock out the rival in one foul swoop.

[aer lingus]

He's killing two birds with one stone. Getting rid of Aer Lingus and starting T/A. Remember EI did everything in it's power in colushion with the Irish Gov to stop FR at the begining, I don't think MOL has forgiven them for that. He will want to crush/belittle EI, it's personal between him and EI. Unfortunetly, like all the squabbles that FR/MOL get involved in, as in Airport/Route disputes it's us, the general public that will be the looser in the the long term.

[aer lingus]

Glad to see someone is thinking along the same lines as me. Well said sunday8pm.

[RAT 5]

aer lingus: it's always easy to compliment those who agree with you, whatever the merits. As my wife says,"do you want to right or happy?"

[MUFC_fan]

...and if MOL is wanting to do this long haul thing seriously he'll be upping his APD battle with Downing Street. GBP65 per pax going to the US is seriously going to eat into their margins.

Or they can do what is expected, go running to the likes of Holland, Spain and Italy where they've reduced (in some cases scrapped) their taxes.

[floss689]

This has noting to do with "testing a long haul model". If he wanted long haul, why waste 100 million in a gift to flybe. Ryanair have plenty of cash reserves to buy whatever long haul aircraft they want. This is plain and simple a hostile takeover attempt in order to destroy Aer Lingus and any competition out of Ireland. This would be an absolute disaster for the Irish people, the keys to the country would be in the hands of a mad man! He would have complete control travelling public and the DAA.

[sunday8pm]

Maybe, but they're giving Flybe less than the cost of 1 x new A330 and if it does the trick they'll gain 7 or 8 long haul aircraft from the takeover as well as achieving the objectives you specify. None of us are doing anything other than speculate here but the water is definitely not crystal clear whichever perspective you're coming from.

[GAZMO]

MUFC

Maybe he could launch TA from BFS as APD is zero?
Or Lough Neagh International as MOL refers to it

[Laasjet]

Floss 689

No, he is far from being a madman. For the first time I will use the word megalomaniac.

We are still not hearing anything from the usual FR fans.

They are usually eloquent and reasoned in their responses. Notice how we talk in terms of MOL and not the airline.

[Aerlingus231]

It means the beginning of FR long haul. £250 rtn to JFK from STN, EMA, MAN using EI aircraft. And they'll fill every single one of them.
Or you know, £500-£600, whatever people will buy them for. MOL isn't interested in lowering ticket prices, he's interested in profit, and if people are willing to pay that much now and still manages to fill the aircraft (Yes, Aer Lingus has a very very high load factor on Long Haul) then he's not going to suddenly start charging less than he's currently able to get out of you. MOL will charge as much as he can get passengers to pay, because he's in the business of making money, not lowering fares.

[sunday8pm]

That too is true and from Ireland that may well be the case. I was only really playing devils advocate. That being said if we think hypotyrtically even one step further ahead lets not forget how MOL would revel in offering the cheapest T/A "fare" on the market from a PR perspective, and too stick one right on the big LHR/BAA establishment nose. Lest we forget MAG are going to have little choice but to be very cozy with FR in the short and medium term and would break their own backs for all new scheduled T/A services from STN in particular.

[racedo]

That too is true and from Ireland that may well be the case. I was only really playing devils advocate. That being said if we think hypotyrtically even one step further ahead lets not forget how MOL would revel in offering the cheapest T/A "fare" on the market from a PR perspective, and too stick one right on the big LHR/BAA establishment nose. Lest we forget MAG are going to have little choice but to be very cozy with FR in the short and medium term and would break their own backs for all new scheduled T/A services from STN in particular.

Why bother with T/A from UK when you have an immediate hit on APD of £65 when you offer fares to hub airports in countries with no APD feeding into T/A routes.

MAN-SNN then SNN-JFK where no T/A APD and clear US Immigration so no delays in JFK.

[CabinCrewe]

Full service on a TA flight comes much more into play on longer sectors and Im not sure a low cost TA FR in the current model would work. Look at all the failures at attempts at low cost longhaul. MOL is not daft. Although if anyone could do it it would be FR.
I still dont really understand the FR interest in EI, surely they could just do everything EI does and more right now

[PAXboy]

CabinCreweI still dont really understand the FR interest in EI, surely they could just do everything EI does and more right now.
That's because it's about not just being a bigger airline but about killing the others. MoL worked assidously until he could prove with the numbers that they carried more pax in a year than BA and that, therefore, HE was the world's favourite. He NEEDED to show the Brits that the Paddy was better than them. I have heard him use the term 'Paddy' in interviews because he is so proud of being Irish. The fact that many of the things he does makes people hate him - does not bother him in the slightest.

Now, it appears, he needs to prove himself in his own land. Because he has been sidelined and treated with disdain by many in Ireland - he wants to prove he's the best by killing his enemy, EI. One of the reasons he has been so successful (in financial terms and they are the only ones he's interested in) is because he doesn't care about anything other than the numbers.

I'm sure he's a wonderful guest at dinner parties ...

[RAT 5]

I'm sure he's a wonderful guest at dinner parties ...

That's a curious sign off. I doubt it, unless you are a good listener and don't want to engage in adult conversation. Bring ointment for your ears.

[Sober Lark]

Come on, transatlantic is only part of the dog and pony show.

Dinner party - at least the beef wouldn't be horse and I think he'd be a great host!

[PAXboy]

Sorry RAT 5. It's a rather typical English sideswipe and probably should have put :rolleyes: at the end.

But it would be fascinating to see him close up. (and I'm not joking!)

[Torquelink]

Methinks Mr French is being bedazzled by the prospect of a short term cash injection, which Flybe badly needs, and ignoring what might happen after three years. The entire philosophy of Flybe was to avoid competing with the big boys by operating smaller gauge aircraft on thinner routes. Now they are proposing to add similar gauge aircraft (yet another type to integrate) and go head to head with not only Mr O'Leary but also Ms McCall, Mr Walsh and others. Flybe are unlikely to have the depth of management to run such diverse ops - ATRs in Finland, A320s in Ireland. What happened to "sticking to the knitting"!?

[Sober Lark]

If Mr French had to wait 10 years to draw a bonus would he still find the proposition as attractive?

Resurgam, I like your humour. You could also draw Flybe as a moth burning its wings against the landing lights of a Ryanair 737.

[PAXboy]

To be unkind but this is my opinion, FlyBe have probably been on to a loser for some time. They are in a VERY narrow niche and with the recession likely to run another 5+ years, the chances of making it were always going to be slender. I hope they make it as they are a nice crowd (the few times I've used them) and I think their approach valid. Just, not so much in this era.

I suspect it's more a question of How and When they stop, rather than If. Again, my apologies but they are being squeezed by the big boys above and the coach and the train and the sheer lack of money on the other.

[LNIDA]

Who really knows what's going on inside MOL's head? For sure if he's going to start long haul he's do it out of Dublin where the APD is just €3-€5,using feed from all over Europe, but of course if this was a through ticket from the UK you would pay APD to the USA even going via Dublin, so i would guess he'll basically say book with us to the USA from Dublin and catch a flight to Dublin.

He will know soon enough if the low cost model long haul works with Norwegian set to start service from Oslo in a few months time, having said that Norwegians current product offering is much better than the minimal offering from Ryanair, Ryanair are safe, on time & cheap, but with zero customer care or service, which is fine for a quick blast to France or Spain, but I am not sure i would want 6 hours of scratch cards sales.

[Narrow Runway]

And you definitely wouldn't want it for 5:30 on a night flight home.

[Hansol]

A 737NG will cross the Atlantic whenever MOL is ready for it to, he doesn't need the end of Aer Lingus for that!

[Phalconphixer]

Thinking back to the 1980's isn't this just another re-run of the GEC-Plessey debacle?
GEC's Boss Sir Arnold Weinstock hated Plessey's Sir John Clark and was determined to shut Plessey down one way or another. He tried unsuccessfully on many occasions to buy out Plessey, but was shot down in flames by the then Monopolies and Mergers Commission on the grounds that it would establish a single source for UK Defence Electronics.
So GEC teamed up with Siemens and re-applied... and was successful in his very first application under the new name GEC-Siemens.
Result? Plessey was bought out, asset stripped, GEC got exactly the parts of Plessey that he had been after all the time and Siemens got the sweepings-up.
Plessey disappeared off the face of the map within two years. Weinstock was elated...
Poetic justice however came a few years later when GEC Avionics was taken over by B.Ae.

We have seen similar instances in the last five years or so... BA get together with Iberia to form IAG and promptly shut down British Midland. More asset stripping and the loss of a another major British Company. The appears to be a slight difference slight difference in this example however in that one of the co-signatories seems to be hell bent on destroying the other...

pp

[Expressflight]

What's that old saying about shooting the messenger......?

[Lord Spandex Masher]

Plan B? (http://news.err.ee/economy/9209e78b-3ea2-4419-ad6f-8e4ddaf273df)

[JQKA]

Flybe, the loss-making British airline, and Ryanair have agreed to create Flybe Ireland, if the Irish low-cost carrier's bid for rival Aer Lingus is successful.


Flybe said on Wednesday the two had reached agreement over the possible transfer of aircraft, staff and routes.

The deal is part of Ryanair's attempt to win approval from the European Commission for its third attempt to take over Aer Lingus. The airline needs to make concessions to ensure Irish air travel remains competitive.

Flybe said it would pay Ryanair €1m (£866,000) for the newly created airline.

The deal would see Ryanair transfer to Flybe Ireland 43 European routes, at least nine Airbus A320 aircraft and an undisclosed number of flight crew, engineers, management and facilities to operate the business.

The Irish low-cost carrier will also provide Flybe Ireland with a cash injection of €100m and forward sales cash and liabilities worth around €50m.

Flybe, which is a low-cost regional airline group operating over 180 routes to 65 European airports, is looking to reduce its reliance on revenues from Britain.

"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," said Flybe chief executive Jim French.

Flybe said the deal was would move the airline away from its reliance on UK revenue and Flybe Ireland would start with around €150m of cash on the balance sheet.

However, Mr French added: "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."

[BEagle]

The deal is part of Ryanair's attempt to win approval from the European Commission for its third attempt to take over Aer Lingus. The airline needs to make concessions to ensure Irish air travel remains competitive.


The EC has since blocked this attempt, so I think you'll find that FlyBe Ireland is now a dead duck.

See EC dismisses Ryanair's Aer Lingus bid and deal with Flybe - www.travelweekly.co.uk (http://www.travelweekly.co.uk/Articles/2013/02/27/43294/ec+dismisses+ryanairs+aer+lingus+bid+and+deal+with+flybe.htm l)

No doubt Ryanair will appeal, but I doubt whether they'll have much success.

[StoneyBridge Radar]

No doubt Ryanair will appeal, but I doubt whether they'll have much success.

Of course they will appeal; win or lose, a couple of million Euros in some legal company's coffers to keep MO'L's mug on the front of every mainstream newspaper whilst the appeal goes through must be better value than any regular, mainstream advertising.