Flybe has entered a joint venture with Finnair to buy Finnish Commuter Airlines, Finland’s biggest domestic carrier, for €25 million to expand into the Baltic market.
The UK low-cost carrier has paid €12 million for a 60 percent stake in the joint venture, which will be branded as Flybe Nordic, while Finnair will pay €13 million for 40 percent.
Flybe has also agreed to buy 46 percent of Finnish Aircraft Maintenance.Its total investment in the venture would be €23.6 million including net cash and loan repayments.
Jim French, Flybe’s chairman and chief executive, said the venture offered a good match for his airline, whose sub-100 seat aircraft operate on routes that are too small for the likes of Ryanair and easyJet.
“The strategy is to use this vehicle to create the largest and most profitable airline in that region,” said French.
He also said that the similarities between Flybe and FCA included a vast number of cross-water routes with little competition from railways or road transport.
“We’re going after the whole Baltic regional market and want to replicate in the Baltic regional market what we did in the UK, linking secondary and primary cities,” he added.
Flybe, which operates 69 aircraft from 14 UK airport bases, posted a full-year loss of £4.3 million, hit by the impact of last year’s Icelandic volcanic eruption, severe winter weather and rising fuel costs.
French said his was looking to replicate “two or three” similar deals or relationships under its expansion strategy. He added: “There are a lot of smaller regional airlines who have seen the advance of easyJet and Ryanair, and they are looking for shelter.”
Mika Vehvilainen, Chief Executive of Finnair said: “We are establishing a strong player in the Northern European local aviation market. The vision of the new company is in line with Finnair’s partnership strategy and it is an example of how we are building powerful networks with other leading industry parties, such as Flybe. We expect that our partnership will create a competitive and sustainable player in the Nordic markets. This will benefit also those travellers who use Helsinki as their transfer hub on their way to and from Asia and Europe.”
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