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Stobart Air is 'insulated' from Flybe failure - Walsh

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IAG chief executive Willie Walsh (Niall Carson/PA)

IAG chief executive Willie Walsh (Niall Carson/PA)

PA Wire/PA Images

IAG chief executive Willie Walsh (Niall Carson/PA)

AER Lingus Regional operator Stobart Air is insulated from any fall-out from a potential collapse of its UK-based sister airline Flybe, IAG chief Willie Walsh has insisted.

Flybe and Dublin-based Stobart Air are part of Connect Airways, while IAG owns airlines including Aer Lingus and British Airways.

Connect Airways paid just £2.2m (€2.5m) for Flybe last year but pledged to pump £100m (€116m) of loans into the airline to keep it flying.

Mr Walsh said last week that the Flybe owners "bought a dog" in acquiring the struggling budget airline.

The Stobart group owns 30pc of Connect, as does Virgin Travel Group, a subsidiary of Virgin Atlantic. The US-based hedge fund Cyrus Equity Partners owns 40pc. After Flybe was acquired, Stobart Air became part of Connect.

Stobart Air operates the Aer Lingus Regional service on a contract basis.

Flybe needs cash to survive and its owners have sought help from the UK government.

A provisional plan was thrashed out that would see the payment of about £100m (€115m) of air passenger tax due from Flybe deferred.

But there's been intense opposition from other airlines including Ryanair to what they see as an unfair aid being potentially given to Flybe.

"I'm not concerned," Mr Walsh told the Irish Independent about whether there could be any cross-contamination on Stobart Air if Flybe fails.

"There is a ring-fencing within the business," he said. "We insisted on that because we didn't want any competition issues."

Aer Lingus chief executive Sean Doyle also said that the Stobart model for Aer Lingus "works well for both of us".

"It gives Aer Lingus a very good connection feed into markets in the UK regions," he said.

"It also gives Stobart a very viable business. We have got reassurances and we have got structures in the contract which keep a high degree of autonomy in Stobart and I would see that continuing regardless of what happens with the Connect situation."

"I can have no sympathy for the likes of Flybe in an environment like this," Mr Walsh told analysts last week in relation to the impact the coronavirus will have on weak airlines.

"It's a business model that doesn't work, with shareholders that have suddenly copped on that they've bought a dog, and the idea that the British government is going to bail them out in this environment I think is madness," said the airline boss.

Mr Walsh last week predicted that the current coronavirus scare would push some airlines in Europe and elsewhere towards collapse.

Irish Independent