Flybe shares soar 70% after Virgin confirms bid talks
Shares in Flybe soared 71 per cent yesterday as Virgin Atlantic confirmed it was considering a bid for the struggling British regional airline. Flybe shares were up 6.9p to 16.6p but remain a tiny fraction of the £2.95 at which they floated in 2010.
Last week, the carrier announced it was putting itself up for sale as financial problems mounted. Flybe is expected to lose tens of millions of pounds over the winter, at an average rate calculated by The Independent of £7,000 per hour.
Ryanair and easyJet have both said they have no interest in buying Flybe but Virgin Atlantic is now in talks
over a bid.
“Virgin Atlantic has a trading and codeshare relationship and confirms that it is reviewing its options in respect of Flybe, which range from enhanced commercial arrangements to a possible offer for Flybe,” a spokesperson said.
Flybe confirmed the talks but cautioned that, “there can be no certainty that an offer will be made, nor as to the terms on which any offer will be made”.
Flybe’s domestic network could be used to integrate more customers into Virgin’s international services. Virgin runs long-haul routes mainly serving the US, the Caribbean and Asia, while Flybe operates from smaller UK airports, including London City, Southampton and Norwich, and flies to destinations across the UK and Europe.
Another potential buyer is believed to be transport company Stobart Group, which backed out of a bid in March.
Any successful suitor is likely to have to inject tens of millions of pounds into Flybe, which saw half-year profits plunge from £16.1m to £7.4m. Revenues fell 10 per cent to £409.2m after it cut capacity by 9 per cent.
Flybe, which began as Jersey European in 1979, has 78 planes and carries about eight million passengers a year. The airline has been troubled ever since it floated on the stock market eight years ago and has been hurt recently by falling demand, rising fuel costs and the weak pound.
Trade unions have already raised concerns over the impact of a sale on the carrier’s 2,300 employees.
The latest takeover rumours come after it emerged this week that Flybe’s new route between Cornwall and Heathrow will be subsidised by taxpayers. The Department for Transport and Cornwall Council will each pay up to £1.7m for the route, representing a subsidy of £5 per passenger – or £10 for a round-trip.