Flybe has forged a joint venture with Finnair to acquire Finnish Commuter Airlines for €25 million.
Flybe’s total investment will be up to €23.6 million (£21.3 million), including net cash and loan repayment. Return on investment is expected to exceed 15% by the second full year post acquisition, the airline said.
The deal, announced 24 hours after the UK regional airline revealed annual losses of £4.3 million, will give it control of Finland’s largest domestic air carrier in terms of number of flights.
FCA has a fleet of 15 aircraft and carries 900,000 passengers a year with a turnover of €90 million.
Completion is expected to take place within the next four to six weeks, subject to competition clearance. Flybe will pay €12 million cash and Finnair €13 million as part of the joint venture.
Flybe will take a 60% stake in the joint venture, to be known as Flybe Nordic, with Finnair holding the remaining 40%. Flybe Nordic’s holding company board will comprise three representatives from Flybe, and two from Finnair.
Flybe Nordic will take over FCA’s domestic routes under the Flybe brand, using 15 aircraft leased from Finnair or from the existing owners of Finncom OY, the private investment vehicle which currently owns FCA.
The joint venture plans a “major marketing campaign” to promote the Flybe brand in Finland. Flybe chairman and chief executive Jim French 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. FCA is a great base to build on, with excellent routes and a talented team of employees. It also has compelling growth opportunities.
“Everyone at Flybe is looking forward to working with Finnair and FCA, to drive forward our strategy of creating the largest and most profitable regional airline in the Nordic and Baltic States.”
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