Posted on: 17 July 2018 by Mark Howells
Air Nostrum and CityJet have confirmed plans to create a new holding company that would see the creation of the largest pan-European regional airline, with a fleet of nearly 100 aircraft.
The two companies revealed at the Farnborough Airshow that the combined group would have consolidated annual gross revenues of approximately €700 million. A Heads of Terms agreement has been signed, with the aim of combining the operations of the two carriers in 2019, subject to regulatory approvals. No name has yet been created for the planned new entity, and the eventual ownership structure is not yet finalised, with discussions still ongoing.
Both companies said in a briefing that much of the reason for the tie-up is not only because of the synergies that exist within them, but to also better position them to win a bigger share of Europe’s rapidly developing wet-lease market.
Spain’s Air Nostrum has a fleet of 50 aircraft, which includes 42 Bombardier CRJs (including 30 CRJ1000s), while CityJet has 40 aircraft, including 28 CRJs.
Valencia-based Air Nostrum employs 1,450 people and is well known for being the regional operator for Iberia under a long-standing franchise agreement, flying to more than 60 destinations in Europe and Africa. It has been particularly active wet leasing across Europe for airlines including Lufthansa, SAS, Binter and Croatian Airlines.
Dublin-based CityJet employs 1,250 people and operates an extensive regional network under wet lease contracts with Air France, Brussels Airlines and SAS. Approximately 92% of its operations are wet lease.
Wet lease growth
Carlos Bertomeu, Air Nostrum’s president, said: “Europe is experiencing substantial expansion of wet lease contracts, otherwise known in North America as Capacity Purchase Agreements, as established airlines pursue a strategy of outsourcing their regional flying programmes. By CityJet and Air Nostrum finding a formula for combining their respective resources in terms of aircraft, crew and support services, this will undoubtedly result in a far more comprehensive and cost-effective option for leading airlines in Europe to outsource their regional networks, with confidence in the strength of this proposed new entity as an ideal partner for such activity.”
Pat Byrne, CityJet’s CEO, added that the two companies had much in common, “especially the fact that we both operate large fleets of Bombardier CRJ900 and CRJ1000 aircraft, which we believe is a robust and economic platform and ideal for wet lease contracts.”
Byrne said that by combining, the two companies “will be in a position to respond to the specific needs of customer airlines through our flexibility in the provision of safe, dependable and quality assured operations. Our respective proven capacity and asset management expertise in acquiring aircraft for new wet lease contracts is also a significant added benefit we can provide to our airline customers.”
Byrne added that for the “foreseeable future” both companies see the sub-100 seat sector as their main focus. “Europe is finally catching up with the US – that’s what’s happening and will happen on a large scale. This move means we will be able to respond to the size of contracts and requests for proposals that will be coming into the market in the next few years in Europe.”
Both airlines also operate other aircraft types including ATR turboprops, the Sukhoi Superjet 100 and Avro RJs. All these aircraft would be combined into the new holding company if it proceeds as planned.
Written by: Mark Thomas
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