Flybe rescued by Virgin Atlantic and Stobart consortium

Postado Janeiro 12, 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's bosses publicly put the company up for sale in November after a profit warning in October prompted plans to cut costs and reduce its flights.

Stobart and Virgin will each have a 30% interest in Connect, which will use the Virgin Atlantic brand to operate a network of regional flights provided by a combination of Flybe and Stobart Air.

Virgin, Cyrus Capital and airport operator Stobart Group Ltd. agreed to purchase Flybe for 2.2 million pounds ($2.8 million), according to a statement Friday. Easyjet, a rival in some of the regional routes Flybe operates, had been seen as a contender, after Stobart Group walked away from a bid for the airline in March.

"T$3 he industry is suffering from higher fuel costs, currency fluctuations and significant uncertainties presented by Brexit", said Christine Ourmières-Widener, CEO of Flybe.

A Luxembourg firm wholly owned by funds managed by Cyrus has a 40pc stake in Connect Airways.

Flybe shareholders will receive 1p a share, a steep markdown on the company's Thursday.

"We have been affected by all of these factors which have put pressure on short-term financial performance", she said. "At the same time, Flybe suffered from a number of legacy issues that are being addressed but are still adversely affecting cashflows".

The companies will also provide up to £80 million of further funding to the combined group to invest in its business and support growth.

"By combining to form a larger, stronger, group, we will be better placed to withstand these pressures".

The new entity, Connect Airways, will also acquire Dublin-based Stobart Air just prior to completing the purchase of Flybe. "We aim to provide an even better service to our customers and secure the future for our people". Together, we can provide greater connectivity to our extensive long haul network and that of our joint venture partners Delta Air Lines, at Manchester Airport and London Heathrow.

Warwick Brady, boss of Southend Airport owner Stobart Group, advised by Barclays, said the takeover is an "excellent opportunity" to grow passenger numbers at the airport, and to "play an active role in United Kingdom regional flying".

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

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