Aer Arann in €140m aircraft deal

Regional airline Aer Arann has agreed a €140 million deal with a French aircraft manufacturer and plans to double in size over the next three years.

The company yesterday announced that it will purchase 10 new 72-seater ATR72-500 series aircraft from French manufacturer ATR, which supplies Aer Arann with its existing craft.

The Irish carrier will buy the aircraft over the next three years, which will replace and supplement its current fleet of 14. The move will increase the number of aircraft used by the company to 20 by the end of 2009.

In a statement yesterday, the airline said that the deal would cost $180 million (€140 million).

Aer Arann chief executive, Padraig O'Ceidigh, yesterday described the deal as a significant milestone for the company.

"This expansion will enable us to develop our network further into the UK and mainland Europe and double the size of the airline over the next three years," he said.

Aer Arann recently announced that it was planning to launch a number of new routes.

The company operates 35 routes in Ireland, the UK and France.

It flies 600 times a week and last year boosted passenger numbers by 20 per cent to 1.2 million. Its 2005 turnover was €94 million.

Many of its regional routes are subsidised public service obligation (PSO) services. The EU approves state support for such services as they are designed to aid development in economically disadvantaged areas.

At one stage Aer Arann considered selling a majority stake in the business and hired advisers IBI Corporate Finance to find a buyer.

However, Ryanair's decision last year to offer a Dublin-Cork service in direct competition with Aer Arann forced the sale's postponement.

Mr O'Ceidigh is planning to step aside as chief executive and take over the chairman's role. He said yesterday that the company is searching for a successor.

Toulouse-based ATR is a joint venture between aviation groups Alenia Aeronautica and EADS (which owns Airbus). The company specialises in turboprop craft.