Almost unnoticed by the broader public an Ireland-based cargo airline is making its way up the ladder. The acquisition of Switzerland’s Farnair is the latest step to round off the portfolio of the Dublin-based company. As a result of the acquisition Europe’s highly fragmented aviation industry will consolidate further.
The entire history of the ASL Aviation Group, that dates back to1972, is marked by acquisitions, name changes and business adjustments. From this perspective the takeover announced today (29. October) of the Basel-based Farnair Group is fully in line with ASL’s ongoing strategy of continuous growth through acquisitions. Provided, however, that the competition authorities are waving the deal through. That this is not an automatic assumption as was seen in January of 2013 when Europe’s competition watchdogs vetoed the intended takeover of TNT Express by UPS. This led to the consequence that TNT had to call off an agreement already concluded prior to its UPS debacle to sell much of the fleet managed by TNT Airways and its Spanish offspring Pan Air Líneas Aéreas to ASL.
Large fleet but small sized aircraft
In contrast, ASL’s intended takeover of Farnair is of a much smaller dimension and thus not comparable with the TNT-UPS case. Therefore, it can be expected that the authorities will okay the transaction in the coming weeks because there are no real grounds for refusal.
Given that, the imminent result would be a company with about 1,500 staff and a fleet of 100-plus aircraft, mainly consisting of smaller freighters for operating on short or medium-haul routes, like ATR-72 turboprops, Boeing 737-400SFs, Quick Change versions and some Beech Cargo aircraft. This will enable operational and technical synergies, leading to reduced cost.
Focus on cargo
Both enterprises pursue similar business models by focusing on air cargo transportation services for major package delivery companies and offering ad-hoc charters for uplifting air freight shipments if urgently required by clients. In addition, they engage in ground handling, aircraft leasing activities and maintenance services. As to the price to be paid by ASL to acquire Farnair, no word has been said in a joint release in which their coming together is announced. All they say is that the management team at Farnair Group will remain in place and the merged company intends providing “industry-leading service performance to existing and prospective future customers world-wide.”
As major result of the forthcoming Farnair integration, the ASL Group will widen its reach by gaining direct access to its new partner’s traditional home market Switzerland but also to sites in India, Hungary, and South Africa. This because Farnair has expanded notably in recent years, setting up aviation related services in Europe and beyond.
Since 2014 the capacity provider is also active in West Africa, focusing on cargo services for major integrators as well as offering the local market ad-hoc charters for both cargo and passenger transports.
In 2013, the ASL Aviation Group transported 169,000 tons of cargo generating a turnover of €322 million euros which includes other activities such as passenger services. According to their annual report the Group’s net profit amounted to €17 million euros.
In contrast, the Farnair Group does not reveal their annual profits or losses.