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Air France Ends CityJet Sale Saga While Keeping London Link

May 1 (Bloomberg) -- Air France-KLM Group closed the sale of its CityJet unit to Intro Aviation GmbH with a deal the German buyer said will seek to extend the partnership between the carriers at London City airport.

Air France will continue its commercial cooperation as part of a new industrial plan, with CityJet seeking to develop a European network under its own brand from the London base where it’s the No. 1 carrier, Intro said in a statement today.

The German company finally closed a purchase that includes Belgian arm VLM yesterday, ending an auction that began in 2012 as Air France revamped regional flights after years of losses. Intro is taking on a carrier with 38 BAE Systems Plc Avro RJ85 jets and Fokker 50 turboprops small enough to take off from the short runway at London City, a facility favored by business travelers because of its proximity to the financial district.

London City airport is “one of the most interesting spots we have in Europe,” Intro founder Hans-Rudolf Woehrl said at a press conference today. “CityJet, and even VLM, is not a piece of cake,” he added, “but in the end it’s one of the best opportunities we have to turn this airline to success.”

CityJet will also continue to operate flights for Air France at Paris Charles de Gaulle airport, Europe’s second-busiest hub, with it and VLM remaining separate entities, Woehrl said. The transaction price wasn’t disclosed.

Fleet Renewal

An evaluation of CityJet’s fleet has already begun, with Intro managing partner Peter Oncken saying today that he favors a growth and replacement program over the next 2 1/2 years.

Intro was founded in 1973 by Woehrl, who ran Nuremburg-based carrier NFD before selling that operation to Eurowings in 1992, according to the Reichenschwand-based company’s website.

Woehrl became CEO of Deutsche BA in 2003 after buying the unit for 1 euro from British Airways, which had hired him to shut it down. The operation was refocused on the high-frequency business travel market and sold in 2006 to Air Berlin Plc, which later also bought long-haul carrier LTU from Intro.

“We will still makes some losses this year, but we are hopeful that we reach break-even by next year,” Woehrl said of CityJet’s earnings outlook at today’s press conference.

Intro was advised by Geneva-based Barons Financial Services, which acted on the other deals and said it also initiated the CityJet transaction.

Ernst & Young acted as accounting adviser and Matheson of Dublin and BTU Group of Munich advised on legal matters.

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net Christopher Jasper

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