Published: Mon, January 14, 2019
Economy | By

Virgin Atlantic and Stobart lead consortium to rescue Flybe

Virgin Atlantic and Stobart lead consortium to rescue Flybe

Warwick Brady, CEO of Stobart Group added: "The Board of Stobart Group believes that bringing Stobart Air together with Flybe and partnering with Virgin Atlantic and Cyrus Capital is the best way for us to play an active role in regional airline consolidation". The purchase price for Flybe is just £3.2m giving an indication of just how bad things were at the airline.

Last October, the Exeter-based airline's put itself up for sale after a severe profits warning and a projected loss of £12 million this financial year.

Virgin has been struggling to feed its long-haul flights with passengers from other United Kingdom cities and Chief Executive Officer Shai Weiss said the deal will help.

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.

Cyrus will own a controlling 40% stake in the new company, while Virgin and Stobart will take 30% each.

Virgin Atlantic uses airports like Manchester, Heathrow and Gatwick and the current Flybe feeder routes will be very useful in getting passengers to connect easily with their long haul routes but perhaps less so for other airports around the country.

The Virgin Atlantic-led consortium will lend £20 million in emergency funds to keep the beleaguered Flybe afloat, with a further £80 million invested in the airline post-completion of the deal to drive growth.

Christine Ourmieres-Widener, chief executive of Flybe, acknowledged that the airline had "suffered from a number of legacy issues" which were still negatively impacting cash-flows.

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.

To support the on-going operations of the airline, the consortium, known as Connect Airways, will initially lend £20m to Flybe.

Flybe put itself up for sale in November a year ago after issuing a profit warning.

The company said it hoped to "maintain Flybe's current United Kingdom regional focus".

"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. "We aim to provide an even better service to our customers and secure the future for our people". "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".

Virgin and its new partners form a new joint venture, Connect Airways.

Based in Exeter, Flybe carries around eight million passengers a year from airports such as Southampton, Cardiff and Aberdeen, to the United Kingdom and Europe.

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