Business

Sunday 4 December 2016

Stobart Group preps Aer Lingus Regional operator for imminent sale to CityJet

Published 19/10/2016 | 19:37

CityJet boss Pat Byrne pictured with Ireland football manager Martin O'Neill earlier this year, as the airline was named official airline partner of the Football Association of Ireland
CityJet boss Pat Byrne pictured with Ireland football manager Martin O'Neill earlier this year, as the airline was named official airline partner of the Football Association of Ireland

Further moves have been made today to prepare Stobart Air for sale to CityJet.

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UK-based transport group Stobart, which owns 45pc of Dublin-based Stobart Air, said it had agreed to acquire between 36pc and all of Invesco’s 40pc stake in Stobart Air, as well as the UK asset manager’s 33pc stake in aircraft leasing firm Propius.

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.

Aviation sources said that it’s unusual that Invesco is being paid in sterling for its stake in Propius, when it would have made its investment in the business in US dollars. That means it will shoulder some currency loss on the transaction.

The latest changes pave the way for Stobart Air – which operates the Aer Lingus Regional service on a franchise basis for Aer Lingus – to be sold to CityJet. The deal was first revealed by the ‘Irish Independent’ earlier this year.

Today's deals also mean that a 5pc stake held by Padraig O’Ceidigh in Everdeal is being valued at just £62,000. Mr O’Ceidigh, who was  the Aer Arann chairman until 2013, ran the business as it went into examinership in 2010 and was then sold to Stobart.

UK broker Cenkos owns 10pc of Stobart Air.

It has been expected that CityJet will ultimately pay as much €15m for Stobart Air, and that the Propius leasing arm will be valued at between €60m and €65m for the purposes of the takeover by Dublin-based CityJet.

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

Propius, Based in the Cayman Islands, was established in 2013 as a joint venture between Aer Lingus, Invesco and Stobart Air. Propius owns the Stobart Air aircraft and leases them on a long term basis to the airline.

Following today’s deal, Stobart Group will own 66pc of Propius and up to 85pc of Stobart Air.

The exact shareholding in Stobart Air’s Everdeal holding company will depend on whether other shareholders take up their pre-emption rights to acquire Everdeal shares.

The transactions are expected to complete next month. Aer Lingus will for now retain its 33pc stake in Propius.

Stobart Group also revealed today that Stobart Air made a €500,000 profit after tax last year. It had gross assets of €20.9m at that date. It’s the first time in years that the airline made a profit.

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