Richard Branson’s Virgin Atlantic has teamed up with Stobart Group and Cyrus Capital to buy Flybe for £2.2 million, aiming to rebrand the struggling British regional carrier and use it to feed customers to its long-haul flights. The consortium will provide a 20 million pound bridging loan facility to support Flybe’s working capital requirements and up to 80 million pounds of funding would be made available once the deal was completed.
Flybe, which operates routes from about 25 British airports, including domestic connections to London’s Heathrow, said its short-term performance had been hit by higher fuel costs, currency fluctuations and uncertainties presented by Brexit. “By combining to form a larger, stronger, group, we will be better placed to withstand these pressures,” Flybe Chief Executive Christine Ourmieres-Widener said.
A joint venture company called Connect Airways — 40 per cent owned by Cyrus’ unit DLP Holdings and 30pc each owned by Stobart Group’s aviation unit and Virgin Atlantic — had won the backing of Flybe’s board to buy the airline. However, Flybe’s shareholders will receive one pence in cash for each Flybe share under the terms of the recommended offer, a 94pc discount to Thursday’s close of 16.38 pence. Flybe, Britain’s biggest domestic airline, was valued at 215 million pounds when it joined the London Stock Exchange in 2010.