UK regional carrier Flybe and Nordic national airline Finnair have agreed to restructure the ownership of their jointly owned Flybe Nordic venture, with Flybe agreeing to sell the shares that it holds in Flybe Nordic to a potential new majority shareholder or to Finnair for the price of one euro. The sale of the shares is conditional only upon approval being received from the competition authorities.
Finnair and Flybe began their cooperation in 2011 when they founded the Flybe Nordic joint venture, of which Flybe owns 60 per cent and Finnair 40 per cent. The companies have already for some time been discussing the restructuring and cost saving strategy for Flybe Finland but have not been able to arrive at a common understanding to resolve profitability issues.
Under the terms of this agreement Flybe and Finnair accordingly have signed an agreement under which it is intended that Flybe will exit Flybe Nordic by the end of 2014, subject to approval being received from competition authorities.
Flybe Nordic owns the Finnish business Flybe Finland, which is in charge of Finnair’s regional airline operations. Finnair says it is now mapping alternatives to continue Flybe Finland's regional flying with “a cost-effective business model” under a new ownership structure for Flybe Nordic. These alternatives, it says, include “a potential new majority shareholder” for Flybe Nordic.
“The financial performance of our joint venture has not developed according to the expectations of its shareholders. We haven’t been able to arrive at a common view to resolve the profitability issues, and therefore the companies have agreed to discontinue the cooperation,” said Pekka Vauramo, chief executive officer, Finnair. “We aim to find a new majority shareholder and a business model that would enable the development of regional flying in a financially sustainable way.”
Flybe Finland started operating code share flights in August 2011 with ATR 72 aircraft and two Embraer 170s. On 28 October 2012, the cooperation was expanded to cover European flights with Embraer 190 aircraft as contracted flying, after which Flybe Finland has operated a third of Finnair’s European traffic.
The airline currently operates to a number of domestic and European destinations from Helsinki on behalf of Finnair on a contract-flying basis. In addition, Flybe Finland operates to five domestic destinations as well as Tartu, Estonia and Norrköping, Sweden at its own commercial risk.