European business aviation service companies Flying Group and Euralair are squaring off for a legal battle over a proposed takeover that appears to have gone sour.

A year after signing a protocol agreement with Euralair SA, Belgium’s Flying Group has lodged a complaint in a Paris court claiming that the French group has failed to comply with its commitments to assign the business assets of its Paris Le Bourget FBO, Euralair Airport Services (EAS), as part of its plans to set up operations at the Paris business airport. The takeover was to have been part of Flying Group’s wider plan to establish a handling and charter operation at Le Bourget.

Euralair insists that it has not signed an agreement to sell the FBO in its entirety and that a deal selling EAS’s premises at Le Bourget to Flying Group has proceeded without any problem. Both companies say they are continuing to develop their activities at Le Bourget.

On Aug. 8, 2005, the Euralair SA holding company, founded and owned by Alexandre Couvelaire, sold its Le Bourget premises to Flying Group, which operates the Flying Partners fractional ownership program and offers aircraft management. The fast-growing company already operates an FBO in Antwerp, Belgium, and another at Cannes-Mandelieu airport in the south of France, where it is updating its present facility.

At Le Bourget, Aéroports de Paris (AdP)–the Paris area airports authority that owns the site–has granted the Belgian company a 25-year lease on EAS’s former leasehold, where the Flying Group will demolish the present building and build a new facility.

Flying Group has also become the first tenant in half of a new executive terminal building designed to accommodate two FBOs at the entrance to the airport. Until next month, when demolition work is due to begin, EAS is renting the building from Flying Group, before the Belgian company moves into its new FBO building.

Couvelaire, who in 1962 founded Euralair as one of Europe’s first purpose-built FBOs at Toussus-le-Noble outside Paris and later became the first business aviation operator to build a hangar at Le Bourget, confirmed that his company is in talks with AdP for EAS to continue trading at an alternative Le Bourget location.

At the end of last year EAS renewed a five-year deal to remain in the ExxonMobil Avitat fuel network until 2010. The 24-hour FBO last year handled about 4,700 aircraft, doubling its traffic since 2002 and claiming a market share of 20 percent of Le Bourget traffic.

EAS survived when in November 2003 three of its Euralair SA group sister companies went into bankruptcy. The following month, UK-based Angel Gate Aviation bought control of its business aviation company, Euralair International, and its executive charter operations, Euralair Horizons, while Arabasco of Saudi Arabia took over the Boeing 737 maintenance division, Euralair Industries.

The Debate Rages

Couvelaire told AIN that he did not refuse to enter into the final agreement for sale of EAS. He blamed Flying Group for the breakdown of the deal, citing an alleged “late and persistent request to include additional provisions in the final sale and purchase agreement compared to the parties’ March 2005 preliminary protocol as amended, resulting in material changes in the terms and conditions of the forecasted sale of the FBO business.” He also accused the Belgian firm of failing to perform “certain of its material related obligations under the parties’ preliminary protocol.”

According to Couvelaire, Flying Group was also supposed to have included its own Cannes-Mandelieu FBO in a planned new joint-venture company with EAS. “In no way is EAS in breach of any of its obligations under the preliminary protocol or any agreement whatsoever with Flying Group, which is fully liable for the parties’ failure to reach their final agreement,” he maintained.

“Our agreement over the real estate is OK but in the end there was no agreement on the final terms regarding the FBO, according to which Flying Group would have taken about 80 percent with the rest remaining with Euralair SA, which is 100 percent under my control,” Couvelaire told AIN.

According to Flying Group president Bernard van Milders, the Belgian company signed an agreement with AdP in June 2004 for the former EAS site, valid until 2030. Van Milders said that on March 25 last year he and Couvelaire signed a protocol agreement that included the assignment of EAS’s business assets to Flying Group. The agreement covers Euralair’s existing infrastructure, including the aircraft parking zone.

A Le Bourget source told AIN that for two years Couvelaire has sought a partner to take over EAS. Speaking on condition of anonymity, the source suggested that if Couvelaire wins the court case against Flying Group he can sell EAS to another company. The source believes Couvelaire has since made contact with a U.S. firm and wants to sell it the FBO–perhaps on more favorable terms.

The Flying Group president said that whatever happens in the court case, work on the complete reconstruction of the buildings will start as scheduled this spring. He told AIN that to date EAS’s business assets have not yet been assigned to Flying Group. “Couvelaire refused to hand them over on Oct. 8, 2005, although he had confirmed on October 6 that an agreement was in place on this matter,” he stated.

In the meantime, Flying Group has already started its flight and handling operations from Le Bourget. It expects some of its own aircraft to be operational from the new base beginning next month.

Flying Group operates 13 business jets: one Citation, a CitationJet, three Bravos, four Excels, a Citation X; a Falcon 900C and 900EX EASy; and a Challenger 604. It has another seven jets–a Falcon 900DX, three Citation Mustangs, two CJ3s and a Falcon 7X–on order. The aircraft are scheduled for delivery between this month and 2008.