STOBART Air, the airline service known until last week as Aer Arann, is likely to execute options to buy four more aircraft worth over €72m after inking a deal to provide a franchised service for UK carrier Flybe.
Dublin-based Stobart Air, which already operates the Aer Lingus Regional service under a 10-year franchise agreement with Aer Lingus, is to operate six routes for Flybe from the UK to destinations in the Benelux, France and Germany. Details of the exact routes won't be unveiled until next week.
It's the second franchise agreement secured by Stobart Air, which is part of the Stobart group that owns London Southend Airport. Stobart Air will base two aircraft in Flybe livery at Southend to provide the Flybe service and hire an additional 50 staff.
Flybe has been undergoing a significant structural overhaul to help it survive. Stobart gained control of what was then Aer Arann in late 2012. It owns 45pc of what is now Stobart Air, while Invesco owns 42pc and Cenkos Securities, Stobart's own broker, owns 8pc.
Speaking to the Irish Independent, Stobart Air interim chief executive Sean Brogan said that the airline will next week receive delivery of the final ATR 72-600 aircraft that was part of an eight-aircraft order made in 2012.
He confirmed that the company has options to buy four more aircraft. He said that while the options are likely to be exercised, he declined to say when Stobart Air might like to see deliveries of those additional aircraft begin. He said negotiations on exercising the options would probably begin this year.
An ATR 72-60 aircraft, which accommodates 72 passengers, has a list price of almost $25m (€18m).
Stobart owns a third of a Cayman Islands company called Propius Holdings, which owns and leases the aircraft that are used by Stobart Air. Aer Lingus also owns a third of the Caribbean company.
Mr Brogan said the deal with Flybe was secured after Stobart Air was able to demonstrate the success of Aer Lingus Regional. The latter carried 1.1 million passengers last year and Stobart Air has a target to increase overall passenger numbers to two million by 2016. The figure is expected to reach 1.4 million this year.
Mr Brogan said 10pc of the Aer Lingus Regional traffic comprises transfer passengers heading to the US via Dublin.
He said the relaunch of the Dublin-San Francisco service next week by Aer Lingus is already drawing passengers from UK cities, including Bristol, Edinburgh, Newcastle and Glasgow.