Cantillon: Is Stobart looking for a deal that will fly?

All is not well at Stobart, the airline that runs the Aer Lingus regional network. Respected airline executive Tim Jeans has left as non-executive chairman, to be replaced by Andrew Tinkler, chief executive of the Stobart Group, the main shareholder in the Irish operation. In turn, it appears that serious tensions have emerged between Tinkler and the Irish airline’s chief executive, Seán Brogan, over the direction of the operation.

The story, or the most recent part of it, goes back to late last year, when Stobart first announced that it was examining its corporate structure. This followed indications by Invesco, the UK investment and broking group, that it wanted to dispose of its 40 per cent stake. It appeared at the time that Stobart, which holds 45 per cent, might also sell, but this does not now seem to be the case.

It now appears that Stobart wants to take control, with speculation recently that it wanted to merge the airline with Cityjet. Brogan, meanwhile, is believed to have expressed an interest in launching a management buy-out. This seems to be one of the sparks of the recent conflict, which now has significant implications for Stobart shareholders. Stobart invested in what was then Aer Arann in 2010 and, according to a statement yesterday, is now growing strongly.

However there are wider interests at play here. Remember that for Aer Lingus and its new owner, IAG, a key part of its strategy is to feed more passengers into Dublin, in particular, which can take onward transatlantic flights. How would Aer Lingus and IAG feel if this were run by a company that included Cityjet, currently a competitor on the Dublin-London route? To complicate matters further, Aer Lingus has a stake in the company that leases aircraft to Stobart.

In short, this has the makings of quite a scramble, with significant implications for Aer Lingus and IAG as well as Stobart.

No doubt the Irish Aviation Authority is also watching closely. The authority will see as part of its mandate the maintenance of good corporate governance at Stobart, as it would at all the airlines that it regulates.