Flybe takeover: airline rescued with £2.2m Virgin Atlantic and Stobart dealComments Off on Flybe takeover: airline rescued with £2.2m Virgin Atlantic and Stobart deal
Flybe on Friday avoided becoming the latest casualty of turbulence in aviation, with a consortium involving Stobart Group and Virgin Atlantic rescuing the troubled airline.
The group, which also includes investor Cyrus Capital Partners, will buy the struggling carrier — which has 76 planes and valuable slots at Heathrow and Stobart’s Southend airport — through a joint venture company called Connect Airways.
A £2.2 million deal has been agreed that values Flybe at 1p per share — a 94% discount to yesterday’s closing price. The firm was valued at £215 million when it floated on the London Stock Exchange in 2010.
Under the agreement the consortium will provide a £20 million loan to Flybe. A further £80 million could be put into the new combined business.
It is a lifeline for Flybe, which put itself up for sale last year after being hit by higher fuel costs and currency headwinds, as well as softer customer demand and Brexit uncertainty.
Flybe’s chief executive Christine Ourmières-Widener said today: “By combining to form a larger, stronger, group, we will be better placed to withstand these pressures.”
She added: “We aim to provide an even better service to our customers and secure the future of our people.”
Barclays, Evercore and Rothschild advised on the transaction. The deal will eventually see Flybe rebranded to Virgin Atlantic, part owned by Sir Richard Branson. For Virgin the deal marks a return to domestic flights, after a failed attempt five years ago.
Virgin Atlantic’s boss Shai Weiss said: “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 Heathrow .”
Stobart is likely to want the rescue to help keep its target on track to get five million passengers a year through Southend airport, which it also owns, by 2022. Unions welcomed the update, which protects 2400 jobs.