Posted on: 15 January 2019 by Kimberley Young
LARA’s Kimberley Young provides a summary of the latest happenings across the low-fare airline and regional aviation industry.
The first few weeks of the year are a prime time to embark on bold resolutions, make changes and forge new beginnings.
Though many may already be experiencing dwindling motivation towards their New Year goals, the aviation industry is tightening businesses, pursuing new partnerships and refreshing those already established.
The regional carrier flybe has been offered a new beginning of sorts from Connect Airways, a joint venture company made up of Virgin Atlantic, Stobart Group and Cyrus Capital. The boards of flybe and Connect Airways reached an agreement on the terms of a recommended cash offer for the British airline.
Flybe confirmed last autumn that it was reviewing strategic options and seeking potential buyers, and has struggled under industry challenges – particularly higher fuel costs, currency fluctuations and uncertainties surrounding Brexit.
Commenting on the agreement, Christine Ourmieres-Widener, flybe’s CEO, said: “By combining to form a larger, stronger group, we will be better placed to withstand these pressures. We aim to provide an even better service to our customers and secure the future for our people.”
Under the acquisition, flybe will continue to serve customers across the UK and Ireland but will be rebranded to Virgin Atlantic. The group intends for flybe to continue as an independent operating carrier with a separate UK Air Operator Certificate (AOC) under the Virgin Atlantic brand. Prior to the acquisition, Connect Airways is also to acquire Stobart Group’s regional carrier Stobart Air, which is intended to continue under a separate Irish AOC in the group.
On the other side of the pond, Chorus Aviation, the parent company of Canadian regional carrier Jazz Aviation, and Air Canada are planning on refreshing their strategic partnership, with an agreement to amend and extend the capacity purchase agreement (CPA) between Jazz and Air Canada by an additional 10 years – taking it to 31 December 2035.
The companies say the CPA will secure Jazz’s place in Air Canada’s regional network with Joe Randell, president and chief executive officer of Chorus, commenting that the agreement “addresses the need to adapt to a challenging, competitive and ever-changing environment.”
Chorus and Air Canada are also ‘reinforcing’ their strategic partnership through a $97.26 million equity investment in Chorus by Air Canada. Chorus plans to use around 60% of the investment proceeds to purchase nine new larger-gauge CRJ900 aircraft to modernise Jazz’s fleet and generate additional lease revenue under the CPA.
In some brand spring-cleaning meanwhile, Air France has turned a critical eye towards the future of Joon, the subsidiary airline targeted at the young millennial market launched in September 2017.
Air France is considering integrating Joon employees and aircraft into the main airline, admitting that after much discussion, “The brand was difficult to understand from the outset for customers, for employees, for markets and for investors,” and adding, “The plurality of brands in the marketplace has created much complexity and unfortunately weakened the power of the Air France brand.”
Whether by joining forces or slimming down, airlines are pushing to strengthen their businesses and positions within their markets.
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