CityJet Owner Discusses Possible Stobart Air Acquisition

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In 2016, CityJet made a failed attempted to acquire Stobart Air. However, four years have passed, and the European wet lease operator and its controlling company, Falko, may have the opportunity to try again.

CityJet Avro RJ85
CityJet is one of the few airlines in the world operating the Avro RJ85. Photo: MJohnson via Wikimedia Commons 

Falko in talks with Stobart Group

Irish media outlet The Independent is reporting that the UK’s Stobart Group is in the advanced stages of talks to sell its Dublin-based Stobart Air unit to aircraft lessor Falko. The Stobart Air unit of the Stobart Group operates the Aer Lingus Regional service.

In a deal that could be worth over €20m ($23.7m), Falko would be expected to integrate operations between its CityJet brand and the incoming Stobart Air. The two regional airlines have remarkably similar business models as both mainly offer wet lease services, otherwise known as ACMI – which stands for aircraft, crew, maintenance, and insurance.

Stobart Air ATR 72-600
With its fleet of ATRs and Embraers, Stobart Air offers charter and ACMI services in addition to its current partnership with Aer Lingus. Photo: Aero Pixels via Wikimedia Commons 

Responding to speculation

While The Independent and its source have stated that talks are at ‘advanced stages,’ The Stobart Group has only confirmed that it’s only in “early stage” discussions with several parties, including Falko Regional Aircraft. The public statement released yesterday to address the public speculation states:

“As part of this process, we can confirm that we are in early-stage discussions with a number of parties including Falko Regional Aircraft Limited regarding the potential sale of Stobart Group’s stake in Stobart Air and Propius, and there can be no certainty that any transaction will be forthcoming or whether acceptable terms will be agreed,” -Stobart Group

sas-cityjet
Falko is an aircraft lessor that also owns the CityJet airline brand. At the moment, CityJet only has a contract to operate services for Scandinavian carrier SAS. Photo: CityJet

One key requirement?

The Independent reports that the deal and its speculative value is dependent on Stobart Air securing an extension to its existing Aer Lingus franchise contract. With the current contract set to expire in 2022, there is no guarantee this will happen.

In fact, in May, IAG chief executive Willie Walsh said that Aer Lingus had not signed an extension to the franchise agreement with Stobart Air. In fact, Walsh said that Aer Lingus had also been approached by other carriers interested in operating the Aer Lingus Regional service.

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Aer Lingus Regional, ATR 72-600
Sources report that the acquisition with Stobart Air is contingent upon the carrier securing an extension to its agreement with Aer Lingus to continue operating its regional services. Photo: John Hughes via Wikimedia Commons 

As Stobart Group’s most recent public statement mentions, ‘a number of parties’ in addition to Falko, it would be interesting to see which other groups are interested as well. In this challenging economic climate where travel demand has decreased significantly, it would seem that a tie-up with CityJet would be a sensible move to reduce competition.

Do you think this deal will go through? Are you in favor of it? Let us know in the comments.

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