Possible merger of Cityjet & Stobart.

pepe the prawn

In today's news, talks of a possible merger between Cityjet and Stobart. Stobart group are looking to sell their share of the business, with a number of interested parties throwing bids into the ring.

http://m.belfasttelegraph.co.uk/business/news/stobart-air-and-cityjet-eyeing-tieup-to-create-huge-new-group-34585727.html

Shannon757

Will it still be called Stobart?

arubex

No more airline mergers, please.

I don't really see any synergies between the two anyhow, on the operational side. I suppose they could reduce costs a bit by merging and reducing administrative staff but is that really worth the trouble?

pepe the prawn

Shannon757 wrote: »

Will it still be called Stobart?

Citybart? Stojet? :pac:

Dardania

arubex wrote: »

I don't really see any synergies between the two anyhow, on the operational side. I suppose they could reduce costs a bit by merging and reducing administrative staff but is that really worth the trouble?

That could possibly be the only synergy. And from that basis, develop as a long haul feeder/regional interconnector operator. Looking at the groups they (separately) work with at the moment: IAG (via EI), AF/KLM (via AF) - they could expand that a bit, and maybe even target the LH group (e.g. Austrian) for regional or long haul feeder routes...

A bit like the model Mesa et al do with United Express in the US

pepe the prawn wrote: »

Citybart? Stojet? :pac:

Stobar-Euro-regional-feeder-jet

cson

Anyone know why Stobart are divesting?

Seems to be a profitable business for them?

pepe the prawn

cson wrote: »

Anyone know why Stobart are divesting?

Seems to be a profitable business for them?

As far as I know, and I'm open to correction here, stobart had hoped for the airline to assist in their expansion of services from London Southend airport, which they also own. But it didn't have the desired effect and so the reason for offloading it now.

TheFitz13

If this was to happen, would EI still work with Stobart?

Locker10a

TheFitz13 wrote: »

If this was to happen, would EI still work with Stobart?

Yes, seen as that is the only profitable side to the business, at the moment anyway !

Tenger

TheFitz13 wrote: »

If this was to happen, would EI still work with Stobart?

Absolutely.

Stobart makes money from their contract with EI, any new buyer/owner would want to continue any current positive revenue stream.

Similar with Cityjet, any current deals that generate positive revenue will be retaining regardless off who purchases them.

RadioRetro

pepe the prawn wrote: »

As far as I know, and I'm open to correction here, stobart had hoped for the airline to assist in their expansion of services from London Southend airport, which they also own. But it didn't have the desired effect and so the reason for offloading it now.

^^^ Bang on the money.

Industry sources say one reason behind Stobart’s original investment was that it hoped to use the airline to feed traffic to London Southend Airport, which it owns. However, while the carrier has grown the network that it operates for Aer Lingus, it did not deliver significantly to Southend. Instead, British budget carrier EasyJet and commuter airline Flybe are dominant there.

Linky to full story.

Tenger

This has been posted on the SSJ twitter feed:
https://twitter.com/superjetintl/status/717005034848972800

getting real now

pepe the prawn

Further developments... Wonder if it will mean any significant changes for Stobart...

http://m.independent.ie/business/irish/stobart-air-sale-to-cityjet-set-to-close-next-week-34977877.html

Locker10a

Will be interesting to see what happens with EI regional now, in terms of fleet and development etc.
I think CityJet will have a bright future as airline that contracts itself out to work franchises for other airlines.

goingnowhere

This could get interesting, the SSJ appears to be a decent bit of kit, for all intents its a airbus A318 clone

Given its low capital cost it could be a serious interest for EI regional on some of the stronger routes, also could be good on those long/thin mainline routes which EI have abandoned in recent years (ARN/HEL/CPH)

Cravens

ARN and HAJ are definitely ones that would suit EI with the SSJ, also this potentially can open up more EU routes that are perhaps not so obvious, such as RTM (but that could be done by an AT76).

Airplane Man

I have read that this deal is likely to be sealed soon.

Airplane Man

Airplane Man wrote: »

I have read that this deal is likely to be sealed soon.

The deal was sealed last week apparently and will be announced either this week or next.

Airplane Man

Deleted User wrote: »

The deal was sealed last week apparently and will be announced either this week or next.

Yes thats what I heard. Will it be good or bad for Stabort in your opinion?

JCX BXC

Airplane Man wrote: »

Yes thats what I heard. Will it be good or bad for Stabort in your opinion?

Consolidation can only be good for both airlines in this climate.

Main problem I see is the vastly different fleet types.

BonkeyDonker

Carnacalla wrote: »

Consolidation can only be good for both airlines in this climate.

Main problem I see is the vastly different fleet types.

Once the RJ's are gone does it not just leave the ATR's and SuperJets? I am ignoring the RJ's for SAS as they are to perform a specific function and I am sure are costed as such.

This gives the combined entity a modern, flexible and fuel efficient fleet of aircraft to fight for business.

BonkeyDonker

BonkeyDonker wrote: »

Once the RJ's are gone does it not just leave the ATR's and SuperJets? I am ignoring the RJ's for SAS as they are to perform a specific function and I am sure are costed as such.

This gives the combined entity a modern, flexible and fuel efficient fleet of aircraft to fight for business.

I'd agree, two type fleet obviously not as simple as a one type fleet but new/modern type. However, Cityjet staying with SSJ beyond 2018 depends completely on Sukhoi following through on promises with regard to engine upgrade for LCY and other mods.

Airplane Man

Airplane Man wrote: »

Yes thats what I heard. Will it be good or bad for Stabort in your opinion?

I'd like to think good but Cityjet need to stem the flow of pilots leaving Stobart (a good few went to Cityjet/Aer Lingus/Emirates for much better pay). It's good for Cityjet as they'll have access to the Aer Lingus contract, it's good for Aer Lingus as they will have access to jets for the extra capacity for pax and bags.

It's good that both EI and IAG gave the seal of approval in the last 4-6 weeks on the deal.

TheCockpitGuy

Considering CityJet were at deaths door only a couple of years ago I don't know how they are pulling this off. Stobart may be smaller but are the stronger airline. I think this is going to be bad for them in the long run.

Airplane Man

Deleted User wrote: »

I'd like to think good but Cityjet need to stem the flow of pilots leaving Stobart (a good few went to Cityjet/Aer Lingus/Emirates for much better pay). It's good for Cityjet as they'll have access to the Aer Lingus contract, it's good for Aer Lingus as they will have access to jets for the extra capacity for pax and bags.

It's good that both EI and IAG gave the seal of approval in the last 4-6 weeks on the deal.

Yes it sounds like it will be good for Aer Lingus. It will be good for City Jet too if they can stem the flow of pilots leaving Stobart.

Airplane Man

TheCockpitGuy wrote: »

Considering CityJet were at deaths door only a couple of years ago I don't know how they are pulling this off. Stobart may be smaller but are the stronger airline. I think this is going to be bad for them in the long run.

I quess only time will tell The Cockpit Guy.

Locker10a

Deleted User wrote: »

Airplane Man wrote: »

Yes thats what I heard. Will it be good or bad for Stabort in your opinion?

I'd like to think good but Cityjet need to stem the flow of pilots leaving Stobart (a good few went to Cityjet/Aer Lingus/Emirates for much better pay). It's good for Cityjet as they'll have access to the Aer Lingus contract, it's good for Aer Lingus as they will have access to jets for the extra capacity for pax and bags.

It's good that both EI and IAG gave the seal of approval in the last 4-6 weeks on the deal.

I would imagine that Stobart staff will be brought over to Cityjet contracts (better than stobart) and this should satisfy pilots thinking of leaving?
I think its exciting for EI if they introduce the SSJ, but I imagine it would only be on limited routes.

Pat Dunne

Locker10a wrote: »

I would imagine that Stobart staff will be brought over to Cityjet contracts (better than stobart) and this should satisfy pilots thinking of leaving?

I'm sure that this would be welcomed by the employees, however this is the world of corporate mergers and takeovers, we're talking about!

Locker10a

Pat Dunne wrote: »

Locker10a wrote: »

I would imagine that Stobart staff will be brought over to Cityjet contracts (better than stobart) and this should satisfy pilots thinking of leaving?

I'm sure that this would be welcomed by the employees, however this is the world of corporate mergers and takeovers, we're talking about!

Yes but the one company couldn't have two seperate contracts for employees working for the same company both based in Ireland! They will eventually have to merge contracts! I'm sure it's something the unions will be all over

Pat Dunne

Locker10a wrote: »

Yes but the one company couldn't have two seperate contracts for employees working for the same company both based in Ireland! They will eventually have to merge contracts! I'm sure it's something the unions will be all over

I'm afraid this is exactly what actually happens in the business world, there are many companies operating in Ireland doing exactly this, the Banks for instance, along with several large nation wide retailers come to mind immediately.

Even the Civil Service operate a system whereby employees hired post 1995 are offered substantially less favourable pension plans to employees hired pre 1995.

I'm sure that over the years that you have encoutered the phrase, "Yellow Pack" employees? This is where new recruits are brought into a company and offered less favourable salary terms and conditions than existing employees. In most cases the Unions will just simply protect the existing employees. Do we even know if there are Unions in City & Sto?

Avada

I wonder will Cityjet continue DUB - LCY (at least in their own livery) given that they are competing with IAG (BA Cityflyer) on the route. It would seem strange given they will be operating EI Regional flights.

JCX BXC

Avada wrote: »

I wonder will Cityjet continue DUB - LCY (at least in their own livery) given that they are competing with IAG (BA Cityflyer) on the route. It would seem strange given they will be operating EI Regional flights.

I would assume so yes. LCY has massive Cityjet ops, you can hardly expect them to pull out just because a company the fulfil a contract for isn't happy. If they do that they may as well close the LCY base, cut the DUB-CDG flights as they compete with EI and continue with their other Irish flights.

Oh wait, now they're all gone.

Avada

Carnacalla wrote: »

I would assume so yes. LCY has massive Cityjet ops, you can hardly expect them to pull out just because a company the fulfil a contract for isn't happy. If they do that they may as well close the LCY base, cut the DUB-CDG flights as they compete with EI and continue with their other Irish flights.

Oh wait, now they're all gone.

I was more thinking would it become an EI Regional flight rather than Cityjet. Fair point re CDG though

man98

From memory Pat Byrne isn't a big fan of unions and given how unfavourable Stobart looks to pilots I don't union conditions there are much better. Unions won't have an issue because they don't have a foothold in either company.

Locker10a

man98 wrote: »

From memory Pat Byrne isn't a big fan of unions and given how unfavourable Stobart looks to pilots I don't union conditions there are much better. Unions won't have an issue because they don't have a foothold in either company.

Both companies both have unions, the CityJet pilots only last week rejected a pay deal, Cityjet cabin crew are also represented by Unite.
I'm not sure who represents the Stobart crew! But even the two airlines combined are a small operation, and I can't see two seperate employe groups who are employed by the same company, working from the same bases agreeing to remain on seperate contacts and pay long term. Nor would it make sense from a recruitment and payroll point of view.

aurigny72

Does anyone know when the announcement confirming the Cityjet takeover of Stobart Air will be made, must be soon i would have thought?

aurigny72

Well we now well into September and still no announcement about the Cityjet takeover of Stobart, thought it had been finalised a few weeks ago, wonder if there has been any last minute glitches.

Thrashssacre

http://m.independent.ie/business/irish/stobart-buys-out-remaining-stake-in-aircraft-lessor-35227904.html

Could this merger be finalised by the end of the year?

gordongekko

Deal off according to the Indo.

Locker10a

gordongekko wrote: »

Deal off according to the Indo.

Indeed, I wonder what the reasons behind it falling apart were.
Anyway no huge loss to either company, but the question now is if Stobart group are still hoping to sell off the airline, and if so who could the next possible buyer be ?

pepe the prawn

Are Stobart going for a possible complete buyout of their investors/stakeholders in order to become an independent concern?

"Following consideration, and informed by our wider [strategic] review, the board has concluded that the agreement with CityJet is not in the commercial interest of the group,” it said.

Stobart Group, which is a publicly-quoted UK company, recently acquired Invesco Asset Management Ltd’s interests in Stobart Air and the aircraft leasing business Propius Holdings.
It said negotiations are progressing to acquire the remaining 33 per cent interest in Propius from Aer Lingus."

They have also claimed that they now intend to further expand their London Southend services...

sandbelter

Can I be the devils advocate here?
I don't think Stobart ever saw Cityjet as their preferred partner, that was always Flybe.  Stobart Group's interest in aviation arose from their investment in airports, which seems to me be their principal focus.  For them I suspect the attraction was getting a material operation anchored at Southend, Flybe as the largest regional airline in the UK would always be a key target. 

I say this having watched as Aer Lingus Regional withdraw from two key Flybe hubs (CWL and DSA for reasons that still haven't been clearly explained) whilst negotiations dragged out the summer (experience has always taught me parallel negotiations are going on somewhere elsewhere when this happens).   

If fact I think the Irish Times hit on the head on April 28th when pointed out that all the maneuvers to date (April 28th) have about Stobart Group gaining greater control over Stobart Air and that EI needed to keep a very firm eye on developments.  All that has changed since April 28th is Stobart Group controls more of Stobart Air, EI has given approval for the vision a bigger regional operations and Cityjet has spent a lot of money on due diligence.  

The cynic in me would argue Stobart Group could even dangling EI Regional in front of Flybe knowing their need for a major franchise operation at a large European hub (following the US model).  With a second runway on track, reasonable landing fees and (unlike BA) a franchise friendly airline, Dublin is the only realistic candidate in the British Isles that fits the bill.  

If I was a director at Stobart Group it's what I'd be doing. moving Stobart Air towards Flybe with a view to anchoring operations at Group airports.  Simultaneously ensuring Stobart Group had enough leverage to make Flybe stay, thereby creating greater valuation uplift at the airports, Which at the end of the day provides for greater Group shareholder value.  

If Stobart wanted to be out of Stobart Air they'd have sold to its management and be long gone.  The strategic reasons they've stayed could make for a fraught relationship if it goes awry (so Cityjet may have actually dodged the bullet).   EI and IAG needs to think about where is wants the franchise relationship and check the franchise agreement and have an idea where they want to go before they sell their share in leasing company,  And catch up for a cup of coffee with Cityjet, you may need another potential franchisee in the picture longer term. 
Just me being the devils advocate.

Stevek101

The mooted Ryanair feeder deal could potentially make EI regional redundant.

pepe the prawn

Stobart looking to recruit E-jet Captains and FO's for Dublin and London Southend..

http://www.aviationjobsearch.com/job/e-jet-first-officer/8021777?s=featured

Interesting times ahead for Stobart, great to see further expansion. Looks like they might try to tackle cityjet for more regional routes...

L1011

Stevek101 wrote: »

The mooted Ryanair feeder deal could potentially make EI regional redundant.

To do that, Ryanair would need to restructure timings and frequencies to an extent that, well, they won't

Irish Steve

Stevek101 wrote: »

The mooted Ryanair feeder deal could potentially make EI regional redundant.

If Stobart were operating 737's, maybe, but given they are using a smaller aircraft, so serving routes with less demand, and/or higher frequency than that provided by Ryanair, there is room for both going forward.

What will be interesting to watch will be the way that it is implemented, from a technical aspect, will we see EI codeshares on FR services, or FR codeshares on EI services, or will they be kept "at arms length", so only the ticketing and interlining will be part of the deal.

Then there's the possibility that at some stage, Ryanair might even introduce the ability to book transfers through their bigger hubs, like Stansted. That could be a game changer for some destinations, but I suspect it will be a long time coming.