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Air France-KLM considering sale of Dublin's Cityjet in bid to cut costs

AIR France-KLM is thought to be considering a sale of its Dublin-based Cityjet airline as part of a wider restructuring of the heavily-indebted group. The move would affect up to 1,000 staff.

Although Swords-based Cityjet is loss-making, Air France-KLM is believed to be considering its disposal to streamline its own group operations rather than eliminating the unit from the group solely for financial reasons.

Further clarity on whether the Air France-KLM board will formally put Cityjet on the block is expected within weeks.

Founded in 1992 by chairman Pat Byrne, Cityjet has accumulated massive pre-tax losses in the past few years. In the past three years alone, those losses have amounted to nearly €150m. It made an operating loss of €25.8m in the 12 months to the end of March last year, down from €45.7m a year earlier.

Air France fully acquired Cityjet in 2000. It carried 2.3 million passengers in the financial year to the end of March 2011, when revenue rose 21pc to €259m.

It's the single biggest operator at London City Airport, where it accounts for about half the facility's business. Former Dublin Airport Authority boss Declan Collier has just taken over as chief executive of London City Airport.

A spokeswoman for Cityjet, which is headed by Frenchwoman Christine Ourmieres, told the Irish Independent the airline was looking at a number of operational options.


"As a company, we are studying our options and finding the best solution for the company and our employees," she said.

She declined to say whether those options include a sale of the business by its parent. She said that Cityjet was examining issues such as its routes, its fleet and how it could be best structured.

She insisted that the airline's base would remain in Ireland and that moving it out of the country was not under consideration. The company also performs aircraft maintenance in Dublin.

"We're not a French regional airline," she said. "We have a strong base here in Ireland."

Air France-KLM, which has €6.5bn in debt and wants to cut it by €2bn, announced last month that it was restructuring its unprofitable France-based regional operations. That will involve cutting the number of aircraft and using Paris Charles de Gaulle Airport as a hub for the bulk of its regional activities.

Despite its strong brand and reputation, Cityjet, along with rivals, has struggled to cope with high oil prices. The smaller jets it uses can also be heavy fuel users and their size means it's tougher to make a profit from them.

Aviation analyst Stephen Furlong at Davy Stockbrokers said that if Cityjet was put up for sale there would probably be some interested buyers -- but that there "won't be a telephone book list" of them.

"I wouldn't say the list is zero," he said, pointing out that Cityjet's presence at London City Airport would probably be attractive to some investors.

Irish Independent