Stobart Air has been told that it will no longer run regional services for Aer Lingus.
The Irish carrier informed parent company and Southend airport owner Stobart Group that Stobert Air is not the preferred supplier for a new commercial deal which would have started in January 2023.
Stobart Air will continue to operate the Aer Lingus franchise until that time.
But the group confirmed that it continues to investigate the disposal of Stobart Air.
Irish start-up Emerald Airlines is now poised to take over the regional Aer Lingus services with a fleet of at least 15 ATR-72 turboprop aircraft potentially from Stobart Air on routes from Dublin, Belfast, Cork and Shannon.
Stobart Group said: “The decision not to make Stobart Air its preferred supplier for a new commercial agreement does not alter the group’s intention to exit Stobart Air and [aircraft leasing business] Propius as soon as it is practicable.
“Stobart Air will continue to provide a high-quality service to Aer Lingus’ customers for the remainder of the franchise.
“Stobart Group remains focused on maintaining tight cost control and cash burn is anticipated to remain at the same level as previously announced at the time of the group’s interim results.
Chief executive Warwick Brady said: “The group remains in positive discussions with a number of interested parties and continues to target an exit from Stobart Air before the end of the current financial year.
“Whilst a disappointing decision by Aer Lingus, we believe that Stobart Air is a strategic and attractive asset for a potential buyer with number of options open to it in terms of continued operations beyond its current franchise agreement with Aer Lingus.
“It is well placed to build on eight years of reliable, customer focused connectivity between Ireland and the UK and utilise its European Air Operator Certificate to operate out of Ireland and seek further franchise or independent flying arrangements.
“Stobart Air can also leverage its valuable slot portfolio, and its position as Europe’s largest and most experienced operator of ATR aircraft and enter negotiations with the new Aer Lingus franchisee given the anticipated interest in those assets.”