Ryanair’s proposal to disperse some of Aer Lingus’ route network to Flybe to gain regulatory approval to take over the national carrier has been dismissed by Aer Lingus CEO Christoph Mueller as “farfetched,” despite approval from Flybe’s board of directors and many shareholders.

Under the terms of the accord, should Ryanair acquire full ownership of Aer Lingus, the budget carrier will transfer 43 routes, the requisite number of slots, at least nine Airbus A320 aircraft and flight crew, aircraft engineers, management and facilities to a newly incorporated Flybe Ireland.

Flybe Ireland will operate the 43 routes from Cork and Dublin airports, serving 34 destinations across Europe. The new company will have the right to use the Aer Lingus brand for three years.

Ryanair will capitalize Flybe Ireland with €100 million ($135 million) of cash and provide forward sales cash and liabilities worth about €50 million. Flybe would acquire the company for €1 million and commit to operating an agreed frequency on routes, with the ability to terminate a certain number of routes per year while maintaining capacity guarantees in the Irish market.

If Flybe Ireland exceeds the route termination threshold, it will pay a contractual penalty.

In a statement to the London stock exchange, Flybe today says it has received “irrevocable acceptances” from 64% of shareholders in support of this transaction.

For Jim French, Flybe’s chairman and CEO, creating a Dublin-based airline is in line with the company’s strategy to reduce the carrier’s reliance on the U.K. economy. “The terms of the deal negotiated ensure that Flybe Ireland will be a well-capitalized, well-funded company, enabling us to deliver upon that strategic aim. Flybe has a history of acquiring businesses of scale, restructuring and refocusing them and as a result delivering profitable returns,” says French.

Flybe says Flybe Ireland will return €20 million in pre-tax profits in the 12 months following the transfer.

Aer Lingus’s Mueller, however, is dismissive of the Flybe agreement. “This shady deal, where you create an artificial competitor, funded up front . . . is simply a joke,” he told Irish state broadcaster RTE. “That a weak almost bankrupt carrier is supported to take out a very strong carrier like Aer Lingus . . . I believe is not going to fly.”

Aer Lingus’s 2012 net profit after exceptional items declined 52% year-over-year to €34.1 million, while operating income fell 51% to €42.6 million. Revenue at the same time rose 8.2% to €1.4 billion and enplanements increased 1.5% to 9.65 million.

Aer Lingus has fiercely resisted each of Ryanair’s three takeover attempts.