Desmond's new airline is set to challenge Ryanair
Northern investment in €40m ventureFlights expected to take off by June
FINANCIER Dermot Desmond is in advanced discussions with a group of Northern Irish businessmen planning to establish a low-cost airline to challenge Ryanair on routes between Ireland and Continental Europe.
Mr Desmond is expected to emerge with 30pc of the company, the name of which is a closely-guarded secret.
In return, Mr Desmond will put up much of the €30-€40m in start-up capital which the new airline will require.
David Keys, the Northern Ireland property developer behind the planned venture, will also put up a substantial amount of the start-up equity and will retain 51pc of the company.
The remaining 19pc will be split between a number of small investors and senior employees.
The new airline is expected to be launched in November and will begin flying in June of next year. It will operate on routes from Dublin, Shannon and Belfast, mainly to Spain and Portugal.
It also plans to fly to Poland and at least one other Eastern European destination. According to senior aviation figures, Mr Keys is also in discussion with a number of regional French airports.
Although operating from Ryanair's home territory and flying to many of the same countries, it is understood that the new airline will not fly to any of the airports currently serviced by Ryanair. Industry sources said the new airline has already placed an order for two Airbus A320s, which carry 180 passengers, and has an option on a further three.
The new airline will be based in Belfast but will also have offices in the Republic.
Industry sources said that financial guarantees on aircraft being leased by the new airline will make up much of the start-up costs.
Mr Desmond will not be looking for an immediate return on his money.
Start-up airlines typically take between two and three years to break even.
Some start-up low-cost airlines have attempted to circumvent the normal regulations by contracting the actual flying to an established non-competing airline.
However, it is understood that Mr Keys' and Mr Desmond's proposed new airline has already applied for an Air Operators Certificate from both Irish and British regulators.
Tom McEnaney
Source