Virgin and Stobart Group in £2.2m deal for Flybe

VIRGIN ATLANTIC and Stobart Group have swooped on regional airline Flybe in a £2.2m deal which will see the creation of a new airline group.

The companies, in conjunction with Cyrus Capital Partners, have agreed an offer of just 1p per share for Flybe, which put itself up for sale in November.

The price represents a significant markdown on Flybe’s Thursday closing price of 16.38p. Shares in the airline crashed to as little as 1.2p on Friday morning following the announcement.

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

Cyrus will own 40 per cent of the new company, while Virgin and Stobart will take 30 per cent apiece.

The three companies have committed to make a £20m bridge available to support Flybe’s current operations, while an additional £80m will be provided to the combined group.

Flybe chief executive Christine Ourmieres-Widener said the firm had been forced to seek a buyer due to higher fuel costs, currency fluctuations and Brexit uncertainty.

“We have been affected by all of these factors which have put pressure on short-term financial performance,” she said. At the same time, Flybe suffered from a number of legacy issues that are being addressed but are still adversely affecting cashflows.