Finnair and Flybe buy Finncomm airlines

Europe’s largest regional airliner Flybe Group PLC from UK and Finnair (OMXH: FIA1S) announced they have reached an agreement to acquire Finland’s largest domestic air carrier in terms of number of flights Finncomm Airlines aka Finnish Commuter Airlines via a newly formed a joint venture called Flybe Nordic AB.

The joint venture will be formed with Flybe taking a 60% stake while Finnair holds the remaining 40%. Finnair will be paying slightly more for its stake. Flybe expects above 15% ROI by year two following acquisition. Finnair has traditionally had return on investment closer to 1.5%. Finnair, which is trading at near all-time lows, gained 3,36% today.

Finncomm carries around 900 000 passengers per annum and has 15 operational aircrafts with further 3 ordered. Flybe and Finnair foresee further opportunities of growth in the Nordic countries and Baltics in addition to the strong market stake in Finland. Finnair will buy most of the Finncomm’s planes at market prices and then lease them to the new joint venture.

For Finnair the venture represents a shift toward more cost effective operations. The company official commented the new joint venture will operate with the regional airliner model, with prices somewhere slightly above low-cost airliners. The acquisition is subject to competition authorities’ approval. Here are the company releases from Flybe and Finnair.