Flybe sold for £2.2m in cut-price deal

Flybe plane

Virgin leads bid to buy Flybe for just £2.2m

The former chief executive of Stobart Group, the infrastructure conglomerate, has stoked his bitter war with the company by staging an audacious market raid on shares in Flybe, the regional airline.

Virgin Atlantic and Flybe already have a codeshare agreement in place, meaning that passengers are able to transfer between the two airlines on selected flights.

Connect Airways will operate independently to Virgin Atlantic under one management team, owned 40 per cent by Cyrus Capital Partners, 30 per cent by Stobart Aviation, a wholly owned subsidiary of Stobart Group, and 30 per cent by Virgin Atlantic.

Under the plans, the airline will be combined with Stobart Air in a joint venture called Connect Airways.

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This will be followed by a further £80 investment in future months.

The trio, through Connect Airways, is offering 1p a share to Flybe shareholders, some way below Thursday's closing price of 16.4p.

"Cyrus, Stobart Group and Virgin Atlantic believe that combining Flybe and Stobart Air in a more integrated commercial cooperation with Virgin Atlantic's long-haul operations will create a fully-fledged United Kingdom network carrier under the Virgin Atlantic brand", they said in the statement.

The deal will see Cyrus, Stobart group and Virgin Atlantic commit to make available a £20 million bridge loan to support Flybe's ongoing working capital and operational requirements.

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Rising oil prices and the weakening of sterling have put airlines under intense pressure, with a deepening industry price war accentuating the financial squeeze. Stobart Air operates a wet lease and aircraft leasing business. "At the same time, Flybe suffered from a number of legacy issues that are being addressed but are still adversely affecting cashflows".

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

For Virgin Atlantic, control of Flybe's regional network will provide a valuable feed into its long-haul flights to global destinations. "We aim to provide an even better service to our customers and secure the future for our people".

Virgin Atlantic chief executive Shai Weiss, whose firm is being advised by Rothschild, said: "Together, we can provide excellent connectivity to our extensive long haul network and that of our joint venture partner, Delta Air Lines, at London Heathrow Airport and Manchester Airport for the benefit of our customers". Mr Branson sold a 31pc stake in Virgin Atlantic to Air France-KLM in 2017, and retains a 20pc holding in the airline.

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"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.

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