Take-off for Flybe as Virgin eyes bid

SHARES in Flybe rocketed more than 70pc after it confirmed talks with Virgin Atlantic about a takeover bid, adding £11m to its value.

The budget airline – which is part-owned by Sir Richard Branson – confirmed Virgin is one of the parties it has been speaking to since putting itself up for sale last week.

Virgin Atlantic’s interest could start a bidding war for the struggling business.

Easyjet and British Airways parent group IAG have previously been touted as two potential buyers.

George Salmon, equity analyst at Hargreaves Lansdown, said that Stobart Group, the owner of Southend Airport, which is one of the airports Flybe operates from, has also been tipped as a possible buyer.

He said: ‘That makes Virgin’s interest particularly encouraging for investors, as it raises the prospect of a bidding war despite the challenges facing the wider sector.’

Flybe shares rose 71.3pc, or 6.89p, to 16.55p yesterday.

Rising oil prices and fluctuations in the pound have hurt Flybe, which is already struggling with a lack of demand for its domestic flights.

The Exeter-based airline put itself up for sale after disappointing results, though had also been considering cutting its fleet or selling off assets.

The company has warned it is expecting to plunge to a £22m loss this year, £2m more than its £20m valuation.

In a statement, Virgin Atlantic confirmed it is considering an offer but there is no certainty one will be made.