Finnair and the largest European regional airline Flybe of UK announced today that the companies will jointly acquire 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 split 60 % Flybe and 40 % Finnair. Flybe Nordic AB’s board will comprise three representatives from Flybe, and two from Finnair.
Flybe Nordic AB will acquire FCA for a total consideration of 25 million euro plus net cash in the acquired business at completion. Under the terms of the joint venture, Flybe will pay 12 million euro cash and Finnair 13 million euro cash. Completion is expected to take place within four weeks from signing. FCA will continue operating FCA's existing domestic routes under the Flybe brand. Flybe plans to take over the day-to-day operation and management of the airline from August 1, 2011.
"The joint venture with Flybe and the acquisition of FCA are 100% in line with the Finnair strategy. Our target is to partner with the industry best to create added value to our customers and shareholders. 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", says Finnair CEO Mika Vehviläinen.
"We are excited about the co-operation with Flybe", notes Vehviläinen. "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 to purchase FCA fleet and lease it on market terms
The FCA fleet will transfer to Finnair: Finnair will buy the FCA fleet of nine ATR 72 aircraft at market price and lease them to FCA, owned by Flybe Nordic. In addition, Finnair has committed to purchase the three Finncomm ordered, high-demand ATR 72s, to be delivered autumn 2011 and autumn 2012. The aircraft will be leased directly to FCA at a market price.
The remaining four ATR 42 aircraft owned by Finncomm Oy will be leased to FCA for certain predefined periods. This FCA fleet of modern and cost effective turbo-prop planes allows FCA operate value-adding regional flights in the target markets. In addition, FCA will continue leasing of two Finnair owned E170 aircraft.
Finnair's investment in these nine ATR 72's will be approximately 104 million euro including 70 million euro debt liabilities for the ATR fleet.
"There's a huge demand and undersupply in the industry for the ATR aircrafts. 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", continues Vehviläinen.
Finnair has partnered with FCA for over 10 years to provide point to point and feeder traffic services in various Finnish and Baltic markets. FCA is Finland’s largest domestic airline by operations, currently flying approximately 900,000 passengers annually. It currently has 15 regional aircraft and an annual turnover of approximately €90 million. The company employs approximately 400 people.
FCA will continue to operate its current routes under Flybe brand but the intention of Finnair and Flybe is to develop the joint venture to become the leading regional airline for the Nordic and Baltic countries in the coming years.
The acquisition is subject to approval of the relevant competition authorities.
Note to the editors:
The companies will shed more light to the future visions of the company in a press conference to be held today at 11 am Finnish time at Vip President -terminal, Liikelentotie 10, Vantaa.
Erno Hildén, Chief Financial Officer
tel. +358 9 818 8550
Arja Suominen, Senior Vice President, Communications and Corporate Responsibility
tel. +358 9 818 4028
Kati Kaksonen, Investor Relations Officer
tel. +358 9 818 2780
Finnair is the fast boutique airline between Asia and Europe. Established in 1923, Finnair is one of the world’s longest continuously operating airlines. Following its strategy, Finnair has in recent years emerged as a major player in connecting East and West. Finnair's route network has the fastest connections between 10 destinations in Asia and 50 in Europe making Helsinki a significant hub between Asia and Europe. The company has determinately invested in a new fleet which consumes significantly less fuel than older aircrafts. Finnair Plus program serves Finnair's frequent flyers, who will also benefit from Finnair's membership in the quality oneworld alliance and its cooperation with other industry partners.
Headquartered in Exeter, UK, Flybe is Europe’s largest regional airline and the UK’s largest domestic airline, supported by one of Europe’s leading regional aircraft maintenance, repair and overhaul (‘‘MRO’’) businesses, trading as Flybe Aviation Services and a developing training business, trading as the Flybe Training Academy.
The Group currently operates 69 aircraft from 14 UK domestic airport bases and serves 73 airports in total over the UK and twelve other European countries. Last year Flybe flew 7.2 million passengers, with business travel making up 45% of its customers.Flybe floated on the London Stock Exchange in December 2010.