Stobart Air's takeover talks move up a gear
Takeover talks between CityJet and Stobart Air have intensified, with signs a deal could be soon ready to land, the Irish Independent has learned.
The two Dublin-based airlines have been involved in negotiations for a number of months with a view to CityJet striking a merger deal with the Stobart Air business, which operates the Aer Lingus Regional service.
That was initially just one of a number of options being explored by Stobart.
The Irish Independent revealed the takeover talks in March.
Striking a merger involves a significant number of players. Stobart Air is 45pc-owned by UK transport group Stobart. Invesco Perpetual owns 40pc, whole broker Cenkos owns 10pc. Former Aer Arann chairman Padraig O'Ceidigh owns 5pc. The airline, previously known as Aer Arann, was acquired out of Examinership by Stobart and its partners.
Last year, Invesco signalled it wanted to exit the business. Stobart Air then began exploring a possible sale of the company.
That drew bids for about €65m, including one from Stobart Air managing director Sean Brogan.
However, last month Mr Brogan's departure from the airline was announced, ending the possibility of a management buyout.
In tandem with that sales process, Stobart Air has been exploring a tie-up with CityJet, which is now owned by a group of investors including founder Pat Byrne, having been acquired from Germany's Intro Aviation this year.
Under a planned deal, it's believed that CityJet would be the major partner in a merged group, with existing Stobart shareholders taking a minority holding.
But it's not clear how the existing relationship with Aer Lingus will evolve if a deal goes ahead.
Stobart Air's Aer Lingus Regional service feeds passengers from the UK to Dublin, enabling passengers to connect to services to North America.
But Aer Lingus has for some time been engaged in talks with Ryanair to see if its bigger rival could become a feeder airline for the former flag carrier, which is now owned by IAG.
Some issues remain to be resolved, such as who would take responsibility for lost baggage between Ryanair and Aer Lingus flights.
Also, transatlantic passengers would generally carry checked baggage. Transferring baggage from Ryanair flights could impede its short turnaround times.
Ryanair could generate a fee for providing passengers to the Aer Lingus network.
Ryanair is this summer trialling so-called interlining between its own flights at Stansted and Barcelona.
That allows passengers on Ryanair flights from cities not served by a wide range of destinations to connect to the airline's services at the bigger hubs, without having to go through security again. If successful, the trial will see Ryanair expand the service.