Saturday 23 September 2017

Cash injection sees CityJet close in on Stobart Air deal

Stobart Air operates the Aer Lingus Regional service on a franchise basis
Stobart Air operates the Aer Lingus Regional service on a franchise basis
John Mulligan

John Mulligan

Dublin-based CityJet has taken additional steps to cement the takeover of Stobart Air.

A Cayman Islands-based firm, CityJet Holdings, has injected $15m (€13.7m) cash into its Ireland-registered namesake.

It's understood that CityJet is planning to buy both Stobart Air and either most, or all, of a leasing firm in a Cayman Islands, Propius, which supplies aircraft to Stobart Air. Stobart Air operates the Aer Lingus Regional service on a franchise basis.

Filings just made at the Companies Registration Office show that the cash injection received by the Irish unit of CityJet was secured in September.

The transaction came before Stobart Group announced last week that it had agreed to buy between 36pc and all of Invesco's 40pc stake in Stobart Air, as well as the UK asset manager's 33pc stake in Propius.

Aer Lingus also owns a third of Propius. Stobart Group currently owns 45pc of Stobart Air. Following last week's agreement, Stobart Group will own 66pc of Propius and up to 85pc of Stobart Air.

Stobart Group is paying £12m (€13.4m) for the Propius stake, and just £500,000 (€559,000) for Invesco's stake in Stobart Air, which is held in the airline's holding company, Everdeal.

UK broker Cenkos owns 10pc of Stobart Air, while former chairman Pádraig Ó'Céidigh, who once ran Stobart Air predecessor Aer Arann, owns 5pc.

UK-based aviation financing group Falko, which is supported by affiliates of funds managed by Fortress Investment Group, is closely linked to the takeover of Stobart Air by CityJet.

It has been anticipated that CityJet will pay about €15m for Stobart Air and €60m for a majority stake in Propius.

London City Airport is CityJet's main base, while its headquarters are in Dublin.

The company also owns former SAS subsidiary Blue1, and continues to operate that carrier on a wet lease basis. CityJet ordered a number of new Bombardier aircraft for that unit, and has also been taking delivery of Sukhoi SuperJet airplanes for CityJet operations.

It's been speculated for a number of months that SAS might also be considering selling its Danish subsidiary, Cimber, to CityJet.

CityJet founder Pat Byrne has predicted that the airline will make a "modest" profit this year, and also believes the carrier could make a stock market debut within a few years.

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