Exeter-based Flybe expects to be Europe’s largest regional carrier from January 1 when its purchase of most of British Airways subsidiary BA Connect goes through.
The airlines have agreed in principle to a deal that Flybe believes will double its annual passengers numbers to 10 million and enable it to expand its route network by 60%.
The financial details remain under wraps, but it appears BA will pay Flybe to take over its loss-making subsidiary after attributing a write-down of £106 million in group operating profit to the carrier for the three months to September.
BA will take a 15% stake in the enlarged business, which will not include BA Connect’s operations from London City or its single long-haul route between Manchester and New York. Flybe hopes to retain BA Connect’s operations staff.
Flybe commercial director Mike Rutter said: “Finally there will be an airline based outside London that understands what is happening in the regions.”
BA chief executive Willie Walsh said: “Point-to-point regional operations are not a strategic part of our business. We do not see any prospect of profitability [at BA Connect] in its current form.
Rutter said the takeover would take Flybe close to the limits of potential growth in the UK and confirmed it would then look to expand in domestic markets elsewhere in Europe, particularly France.
The airline plans to phase out the BA Connect fleet as soon as possible, replacing them with 80-120 seat Bombardier and Embraer aircraft as part of a £1.2 billion fleet renewal programme.
Flybe reported a £20.5 million profit for the six months to September having grown rapidly off the back of a business model concentrating 70% on domestic routes and the remainder on European cities.