Published: Mon, January 14, 2019
Finance | By Loren Pratt

Virgin Atlantic-led consortium to buy distressed airline Flybe for £2.2 million

Virgin Atlantic-led consortium to buy distressed airline Flybe for £2.2 million

The sale comes after Flybe's profits warning in October .

TravelWatch Isle of Man says the move ends "months of uncertainty" after the Exeter-based airline was bought by a consortium involving Virgin Atlantic and Stobart Group for £2.2million.

Talks have been going on for several weeks but now a deal has been reached that will see Virgin Atlantic (30%) and Stobart Group (30%) come together with hedge fund Cyrus Capital Partners in a group that will be called Connect Airways.

Flights now booked with the airline will continue as the name of Flybe slowly disappears and will be replaced by aircraft carrying the Connect Airways logo.

Struggling regional airline Flybe (BE/BEE) is to be rescued by a consortium involving Sir Richard Branson's Virgin Atlantic and the Stobart Group.

Flybe Group (LSE:FLYB) plummeted 90% in early trading today, hitting 1.56p after revealing a cash offer of just 1p per share with Connect Airways.

Flybe bosses have unanimously recommended the offer, with chief executive Christine Ourmières-Widener saying that being part of the enlarged group leaves it "better placed" to withstand some of the issues it is facing.

Shares were sent crashing 80 per cent this morning on news of the offer from Virgin Atlantic, Stobart Aviation and U.S. 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.

The airline has almost 80 aircraft and the intention of the new group is to put in additional £80m into the airline in order to invest in its business and support its growth.

Virgin Atlantic, the airline founded in 1984 by billionaire entrepreneur Richard Branson, is now majority-owned by United States airline Delta, with a 49pc stake.

'At the same time, Flybe suffered from a number of legacy issues that are being addressed but are still adversely affecting cashflows.

The statement said the new airline would "continue to serve customers and communities across the United Kingdom and Ireland", but stopped short of making any specific pledges about whether all the routes FlyBe now services would continue to exist in the new world. "We aim to provide an even better service to our customers and secure the future for our people".

Flybe, which has 78 planes, will come under the Virgin Atlantic brand "in due course".

"It will allow us to continue to work with Flybe and provides an excellent opportunity to continue to grow passenger numbers at London Southend Airport".

Flybe has 78 planes operating from smaller airports including London City, Southampton and Norwich, and flies to destinations across the United Kingdom and Europe.

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