Chris Jasper/LONDON

A consortium led by UK cargo carrier Air Foyle has purchased a controlling stake in Irish independent airline CityJet for a sum in excess of Ir£5 million ($6.8 million).

Sources close to the deal say that it should stabilise Dublin-based CityJet and allow it develop its burgeoning relationship with Air France, while granting Air Foyle access to an Irish air operators certificate.

Though both airlines are British Aerospace 146 operators, it is understood that fleet commonality was a minor factor in the transaction and that the two do not plan to share aircraft or combine services. CityJet's main attraction is its ties to the French flag carrier.

CityJet's agreement with London Luton Airport-based Air Foyle brings to a close a difficult chapter in the history of the Irish airline, which, until recently, was involved in negotiations with Australian regional carrier National Jet Systems (NJS). NJS had hoped that an investment in CityJet would form the basis for the launch of a British Airways franchise operation in Italy, but the deal fell apart, leaving CityJet desperately in need of funds (Flight International, 10-16 February).

Industry sources say that CityJet shareholders, including Yeoman International (40%) and Standard Life (20%), will see their stakes diluted, with themselves also injecting new capital.

The sources add that an Ir£3.5 million figure quoted in connection with the NJS talks "seriously undervalued CityJet", and that "the price of majority control would be in excess of Ir£5 million".

They also say "the significant funds injected are sufficient to see the airline through its business expansion plan, based on it continuing to develop its own network under the CityJet brand, together with franchise and wet-lease activities involving Air France".

The latter strategy is reflected in CityJet's summer operations, with its two year old Dublin-Paris codeshare service transformed into a risk-bearing franchise operation. The airline is continuing its Air France wet-lease service on Paris-London City, while adding new Nice-Toulouse, Nice-Madrid and Paris-Florence routes and operating a London City-Strasbourg service directly for the French carrier.

CityJet has also expanded own-brand services with flights between the Irish capital and Malaga and Faro, in addition to services to London City and East Midlands.

CityJet will have seven BAe 146s by July, plus two Saab 2000s, and two more due next winter, with a leased BAC One-Eleven and a BAe ATP. Air Foyle, which sources say will now have "an opportunity to undertake activity under the Irish licensing regime", operates eight 146s on services for TNT.

Source: Flight International