Flybe in Virgin Atlantic consortium takeover

Galtero Lara
Enero 14, 2019

A venture led by Richard Branson's Virgin Atlantic Airways Ltd. scooped up Flybe Group Plc for a penny a share, all but wiping out the value of the British regional carrier hit by dwindling passenger numbers, higher oil prices and uncertainty surrounding Brexit.

Flybe put itself up for sale two months as cash levels were putting the airline's operations at serious risk and it realised that a take-over was the only way to prevent a collapse of the airline which would have been catastrophic for many regional airports including Exeter, Southampton and Cardiff.

'This will be timed to coincide with a refurbishment programme for Flybe's fleet to provide a seamless customer experience in keeping with Virgin Atlantic's heritage'.

The consortium, Connect Airways, will acquire the entire issued, and to be issued, share capital of the company for £2.2m and have also committed to making a £20m bridge loan facility available to support Flybe's ongoing requirements.

Flybe will be combined with Stobart Air and operate under the Virgin Atlantic brand, the new owners said.

Shares were sent crashing 80 per cent this morning on news of the offer from Virgin Atlantic, Stobart Aviation and United States private equity firm Cyrus Capital Partners, which will leave shareholders with just a penny per share - a far cry from Thursday's closing price of 16.38p.

Flybe to fly on but under the name Connect Airways.

Flybe chief executive Christine Ourmieres-Widener said "We have been affected by all of these factors which have put pressure on short-term financial performance".

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"Cyrus, Stobart Group and Virgin Atlantic believe that combining Flybe and Stobart Air in a more integrated commercial cooperation with Virgin Atlantic's long-haul operations will create a fully-fledged United Kingdom network carrier under the Virgin Atlantic brand", they said in the statement.

"In the near future, this will only increase, through our expanded joint venture partnership with Air France-KLM".

For Virgin Atlantic, control of Flybe's regional network will provide a valuable feed into its long-haul flights to worldwide destinations.

Flybe will continue to serve customers and communities across the United Kingdom and Ireland.

"The combined entity will be a powerful combination with sufficient scale to compete effectively in the United Kingdom and European airline markets", added the former Easyjet executive.

Shai Weiss, chief executive of Virgin Atlantic, added: "We are pleased to have this opportunity to partner with Stobart Group and Cyrus to bring Virgin Atlantic service excellence to Flybe's customers".

Currently Flybe operates a fleet of 76 aircraft and is the most punctual UK-based airline in a report on "Best and Worst Airlines" issued by "Which" past year.

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