Flybe expands with new acquisition

FLYBE, the largest airline in terms of traffic movement at both Birmingham International Airport and Manchester Airport, has expanded its fleet with the acquisition of Finnish Commuter Airlines, Finland’s largest domestic air carrier in terms of number of flights.

The €25m deal is part of flybe’s joint venture with Finnish flag carrier, Finnair.

Under the terms of the joint venture, Flybe will pay €12m cash and Finnair €13m on completion. Flybe will take a 60% stake in the joint venture, to be known as Flybe Nordic, while Finnair will hold the remaining 40%. Flybe Nordic’s holding company board will comprise three representatives from Flybe, and two from Finnair.

In addition to acquiring 100% of FCA, including 57% of Finncomm Training Centre as well as small IT and charter businesses, Flybe will also make a direct purchase acquisition of 46% of Finnish Aircraft Maintenance.

Flybe’s total investment will be up to €23.6m (up to £21.3m), including net cash and loan repayment. Return on investment is expected to exceed 15% by the second full year post acquisition.

FCA is Finland’s largest domestic airline by operations, flying around 900,000 passengers per annum in the Finnish domestic and Nordic and Baltic regional markets.  It currently has 15 regional aircraft and an annual turnover of approximately €90m.

Jim French, chairman and CEO of Flybe Group, said: “Partnerships and acquisitions are at the core of our European growth strategy, which is to export our strong and proven UK business model to become Europe’s leading and most profitable regional airline.

“Selective acquisitions offer the fastest and most visible route to profitability in the regional airline sector, whilst partnership with Finnair allows us to provide feeder traffic services under an agreed contract, reducing new route risk.

“This deal not only meets our stated strategic objectives but is a perfect example of the successful execution of our strategy.”