Vir­gin At­lantic buys Flybe for $2.8 mil­lion

The Gulf Today - Business - - INTERNATIONAL -

LON­DON: Richard Bran­son’s Vir­gin At­lantic has teamed up with Sto­bart Group and Cyrus Cap­i­tal to buy Flybe for $2.8 mil­lion, aim­ing to re­brand the strug­gling Bri­tish re­gional car­rier and use it to feed cus­tomers to its long-haul flights.

The con­sor­tium will pro­vide a 20 mil­lion pound ($25 mil­lion) bridg­ing loan fa­cil­ity to sup­port Flybe’s work­ing cap­i­tal re­quire­ments and up to 80 mil­lion pounds of fund­ing would be made avail­able once the deal was com­pleted.

Flybe, which op­er­ates routes from about 25 Bri­tish air­ports, in­clud­ing do­mes­tic con­nec­tions to Lon­don’s Heathrow, said its short-term per­for­mance had been hit by higher fuel costs, cur­rency fluc­tu­a­tions and un­cer­tain­ties pre­sented by Brexit.

“By com­bin­ing to form a larger, stronger, group, we will be bet­ter placed to with­stand these pres­sures,” Flybe Chief Ex­ec­u­tive Chris­tine Our­mieres-wi­dener said.

A joint ven­ture com­pany called Con­nect Air­ways - 40 per cent owned by Cyrus’ unit DLP Hold­ings and 30 per cent each owned by Sto­bart Group’s avi­a­tion unit and Vir­gin At­lantic - had won the back­ing of Flybe’s board to buy the air­line. How­ever, Flybe’s share­hold­ers will re­ceive one pence in cash for each Flybe share un­der the terms of the rec­om­mended of­fer, a 94 per cent dis­count to Thurs­day’s close of 16.38 pence.

Flybe, Bri­tain’s big­gest do­mes­tic air­line, was val­ued at 215 mil­lion pounds when it joined the Lon­don Stock Ex­change in 2010.

Air­lines have been look­ing to con­sol­i­date in many mar­kets as a re­sult of ris­ing run­ning costs, higher fuel prices and in­creased com­pe­ti­tion from bud­get car­ri­ers.

Air Berlin, once Ger­many’s sec­ond largest car­rier, went into ad­min­is­tra­tion in Au­gust 2017 when for­mer par­ent Eti­had Air­ways with­drew fund­ing. Nordic bud­get air­line Primera Air and Cypriot coun­ter­part Cobalt both col­lapsed last Oc­to­ber.

Vir­gin At­lantic, which is 49 per cent owned by Delta Air Lines, said Flybe would 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”.

Reuters

A Flybe air­craft taxis at an air­port in Lon­don.

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