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British airline Flybe has reached an agreement with the Irish career Ryanair to create a new airline in Ireland known as Flybe Ireland if the latter's bid for domestic rival Aer Lingus becomes successful.
Flybe said it has also reached an agreement with the Irish carrier over possible transfer of some routes and aircrafts.
Ryanair would transfer 43 European routes, at least nine Airbus A320 aircraft and an undisclosed number of flight crew, engineers, management and facilities to the new airline in order to operate the business, according to a Reuters report.
Flybe, the loss-making British career would pay Ryanair €1m (£865,400, $1.3m) for Flybe Ireland whereas Ryanair would inject cash of €100m in to the new airline along with forward sales cash and liabilities worth nearly €50m. However, Ryanair's bid to Aer Lingus, its third takeover attempt is subjected to approval by the European Commission.
If Ryanair's €694m offer for the acquisition of Aer Lingus is completed, Flybe has to seek formal shareholder approval for the acquisition of Flybe Ireland from Ryanair in early Autumn 2013.
Flybe which operates 180 routes to 65 European airports said that it had received irrevocable acceptances representing 64 percent of the shareholders in support of this possible transaction, well above the European Commission's condition set for the deal to create Flybe Ireland.
"The terms of the deal negotiated ensure that Flybe Ireland will be a well-capitalised, well-funded company, enabling us to deliver upon that strategic aim," Flybe chief executive Jim French told the Reuters.
"However, before Flybe Ireland can come into being there are many hurdles to overcome, not least the EC accepting the remedies offered by Ryanair in its offer to take over Aer Lingus, and then the shareholders of Aer Lingus accepting an offer from Ryanair".