Finnair and UK carrier Flybe, Europe’s largest regional airline, are jointly acquiring Finnish Commuter Airlines (FCA), a Finnish regional carrier owned by Finncomm Oy.
The companies will create a new joint venture called Flybe Nordic AB, to be 60 per cent-owned by Flybe and 40 per cent-owned by Finnair. Flybe Nordic AB’s board will comprise three representatives from Flybe and two from Finnair.
Flybe Nordic AB will acquire FCA (which flies under the name Finncomm Airlines) for a total consideration of €25 million plus the amount of net cash in the acquired business at the completion of the transaction.
Under the terms of the joint venture, Flybe will pay €12 million in cash and Finnair €13 million in cash. Completion of the deal is expected to take place within four weeks of the July 1 signing.
The new owners say FCA will continue operating its existing domestic routes under the Flybe brand, so it looks like the Finnish carrier may well be renamed Flybe Nordic in line with the name of the joint venture that will own it. Flybe plans to take over the day-to-day operation and management of FCA from August 1.
“The joint venture with Flybe and the acquisition of FCA are 100 per cent in line with the Finnair strategy. Our target is to partner with the industry best to create added value to our customers and shareholders,” says Finnair CEO Mika Vehviläinen. “FCA’s current network is a tremendous asset when we continue to further develop our regional network. We believe that Flybe’s point-to-point experience and their unique business model will complement Finnair’s international network competencies in an optimal manner and enables us to build a true Nordic regional champion.”
Adds Vehviläinen: “We are excited about the co-operation with Flybe. Finnair and Flybe have complementing competencies and we believe that Flybe’s experience in regional flying combined with Finnair’s local knowledge and international operations will be a winning combination. We look forward working together and building a new strong player in the Nordic and Baltic markets.”
Finnair will buy FCA’s fleet of nine ATR 72-500s at market price and lease them to FCA, which will be then be owned by Flybe Nordic. In addition, Finnair has committed to purchase three new Finncomm-ordered ATR 72s, to be delivered in autumn 2011 and autumn 2012. The aircraft will be leased directly to FCA at a market price.
Four ATR 42s owned by Finncomm Oy will be leased to FCA for certain pre-defined, but undisclosed, periods. In addition, FCA will continue its existing leases of two Finnair-owned Embraer 170 jets.
Finnair’s investment in FCA’s nine ATR 72s will be approximately €104 million, including €70 million of debt liabilities associated with the ATR 72 fleet.
“There’s a huge demand and under-supply in the industry for the ATR aircraft. Due to the fuel-efficiency, they are optimal for regional flying. For Finnair this is a great opportunity to strengthen our fleet and as such it is a smart investment and ensures that our new venture will have the required capacity from day one,” says Vehviläinen.