Stobart Group still intends to divest its regional operator Stobart Air by the end of the financial year, despite Irish carrier Aer Lingus’s deciding not to renew a franchise agreement with the company.
Aer Lingus has been using Stobart Air for regional connections for several years and Stobart Group had aimed to enhance the attractiveness of the carrier to a potential buyer by sealing a long-term agreement with Aer Lingus beyond 2022.
But the plan has suffered a setback after Aer Lingus informed Stobart Group that it would not be the preferred supplier for a new commercial agreement.
The agreement would have started in 2023, with Stobart Air continuing to operate the Aer Lingus franchise until that point.
Stobart Group insists the Aer Lingus decision “does not alter” its intention to divest the airline, and leasing company Propius, “as soon as it is practicable”, with chief executive Warwick Brady still aiming for a sale “before the end of the current financial year”.
Brady admits the Aer Lingus decision is “disappointing” but says Stobart Group remains in “positive discussions” over the airline with “a number of interested parties”.
“We believe that Stobart Air is a strategic and attractive asset for a potential buyer with number of options open to it in terms of continued operations beyond its current franchise agreement with Aer Lingus,” he adds.
Media reports indicate the Aer Lingus franchise will go to a new carrier, Emerald Airlines, backed by entrepreneur Conor McCarthy.
Brady states that Stobart Air can “enter negotiations” with Aer Lingus’s chosen franchisee given the “anticipated interest” in the Stobart fleet of ATR turboprops.
Stobart Group has a right to break early from its lease agreement of eight ATRs in April 2023, if it is not awarded the franchise deal. This would cost the group $21.2 million, plus finance and maintenance fees.
Stobart Group points out that its investments in Stobart Air and Propius are fully written down. It states that Stobart Air will continue to provide a “high-quality service” to Aer Lingus for the remainder of the franchise term.
“It is well placed to build on eight years of reliable, customer focused connectivity between Ireland and the UK and utilise its European air operator’s certificate to operate out of Ireland and seek further franchise or independent flying arrangements,” the group adds.