Flybe announced yesterday that it had reached agreement with Ryanair for the transfer of several aircarft and routes to Flybe, should Ryanair suceed in its attempts to buy Aer Lingus.

This seems primarily in order to apese regulators about the power of Ryanair in the case of the loss of Aer Lingus. Flybe would effectively compete with Ryanair in the Irish market.

If Ryanair acquired Aer Lingus it would transfer to a new company, Flybe Ireland:

• 43 European routes; a minimum of 9 Airbus and A320 aircraft;
• the requisite number of  flight crew, aircraft engineers,  management and facilities; and
• the required number of slots to operate the 43 routes.
• Ryanair will also capitalise Flybe Ireland  with €100m of cash as well as the forward sales cash from the 43 routes.
• Flybe would acquire Flybe Ireland for consideration of €1m.
• Ryanair is also committing to deliver Flybe Ireland a cost base that should allow it to deliver solid profitability.

It seems odd, at first sight that Ryanair would pay €100m to what would become a competitor.

Flybe has previously expanded by acquisition of BA’s old non-London routes, and the purchase of Finncomm in Scandanavia.

Press release here.