Aer Lingus is understood to have given its blessing to a takeover of Stobart Air by CityJet, in what is expected to be as much as an €80m deal that will close by August and pave the way for a new European regional airline force, the Irish Independent has learned.
Aer Lingus had to effectively consent to the deal because Stobart Air operates the Aer Lingus Regional service under a franchise agreement with the larger airline, which is now owned by IAG.
It's believed that under the takeover deal CityJet's own backers would secure majority ownership of a Cayman Islands company, Propius Holdings, that acts as a leasing firm to Stobart Air. The Caribbean company owns the turbo-prop aircraft that are used by Stobart Air.
Propius was established in 2013 as a joint venture between Aer Lingus and Stobart Air, with Aer Lingus taking a two-thirds stake in it. Aer Lingus has injected millions of euros into the vehicle.
It's understood the leasing vehicle could be valued at between €60m and €65m. It is believed CityJet would control Stobart Air, paying an estimated €15m for the company.
Both CityJet and Stobart Air are based in Dublin.
It has also been rumoured that as part of the takeover deal, the Irish Airline Pilots' Association (IALPA) might secure union recognition at CityJet. It is already believed to have some representation at Stobart Air.
CityJet, founded and headed by Pat Byrne, has just taken delivery of a number of new jets, including the Sukhoi Superjet, and Bombardier CRJ900 aircraft.
The Superjet has just been put into commercial service on charter flights from Cork to France. CityJet has more Superjets due for delivery which will eventually be used on its important Dublin-London City Airport route.
The CRJs are being used by CityJet's Blue1 subsidiary, which operates regional routes on behalf of Scandinavian carrier SAS under a so-called wet lease agreement, where CityJet provides the aircraft and crew for the SAS services.
UK-based transport group Stobart owns 45pc of Stobart Air, with 40pc held by Invesco Perpetual. Broker Cenkos owns 10pc, while former Aer Arann chairman Padraig O'Ceidigh owns 5pc.
Mr O'Ceidigh would stand to gain about €750,000 from the sale of his 5pc stake, if CityJet ultimately pays €15m for Stobart Air itself.
Stobart Air has been exploring its options since last year, when Invesco signalled that it wanted to exit the investment.
Some offers were received for the business.
It's believed that bids included a management buyout offer from former chief executive Sean Brogan, who left the airline last month after the management bid was rejected.
But precisely how last week's Brexit vote might potentially impact the sale of Stobart Air to CityJet is unknown at this time.
Weakened sterling is certain to affect Stobart Air's business in particular, as it generates a chunk of its revenue from UK originating passengers who travel to Dublin to transfer to transatlantic services.
Mr Byrne returned to run CityJet this year after the airline was bought from Germany's Intro Aviation with the backing of investors. Intro acquired CityJet from Air France-KLM in 2014.