New Irish Flybe operation would take over nine A320s

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Flybe Group's proposed new airline operation, linked to Ryanair's bid for Aer Lingus, will be branded Flybe Ireland if conditions arise for its creation.

The UK regional carrier has reached agreement with Ryanair to take over at least nine Airbus A320s and 43 European routes as a remedy to secure European Commission approval for Ryanair's Aer Lingus bid.

Flybe Ireland will act as a competitor to Ryanair and be capitalised with €100 million ($135 million) in cash provided by the Irish budget carrier. Forward sales would also be contributed, worth some €50 million.

Slots for the routes as well as aircrew, engineers and management personnel would also be transferred to the new company.

Flybe Group would take over Flybe Ireland, once established, for a sum of €1 million.

"Ryanair is also committing to deliver Flybe Ireland a cost base that should allow it to deliver solid profitability," says Flybe, confirming the details of the pact.

Flybe says there will be no "expected effect" on UK staff, although the company has already disclosed that it is preparing to shed personnel as part of a separate restructuring programme.

Its Nordic operation will be unaffected.

Flybe Ireland's creation is intended to ease European Commission concerns over competition if Ryanair acquires Aer Lingus.

"This development of creating a Dublin-based airline is in line with the company's stated strategy at the time of [its initial public offering], which was to diversify away from reliance upon the UK economy," says Flybe chief Jim French.

"The terms of the deal negotiated ensure that Flybe Ireland will be a well-capitalised, well-funded company, enabling us to deliver upon that strategic aim."