Flybe rejects second rescue bid amid ongoing sale
The troubled regional airline Flybe has rejected an alternative rescue plan – saying its preferred bid from Virgin Atlantic, Stobart Air and a US hedge fund is the only viable option.
The loss-making carrier put itself up for sale in November 2018 after warning of heavy losses through the winter. On 15 January the consortium of Virgin, Stobart and Cyrus Capital Partners – named Connect Airways – made a bid of just £2.2m. The offer valued each share at only 1p, compared with a prevailing price of 16p and a peak valuation of £2.95 shortly after Flybe’s flotation in 2010.
Flybe’s board accepted the offer and Connect Airways pumped £10m into the carrier to keep it running – 10 days later, the airline drew down on another £5m. But a number of Flybe shareholders are incensed their holdings should be written down so sharply. They include pilots whose pay package had Flybe shares, and Stobart Air’s former chief executive, Andrew Tinkler, who bought around one-tenth of the shares shortly after the Connect Airways deal was announced. Mr Tinkler has been involved in an acrimonious battle with his former company over his sacking after 10 years as Stobart Air’s chief executive.
On Tuesday Flybe received what it calls “a preliminary and highly conditional outline contingency proposal from an investor group led by Bateleur Capital LLC and Mesa Air Group Inc, with indicative support from Mr Andrew Tinkler and other unnamed institutional shareholders”. The alternative bid requires the sale of the airline to Connect Airways not to take place; for agreements being reached with credit card acquirers, banks, lessors, equipment manufacturers and pension fund trustees – and for the Civil Aviation Authority to give its consent.
A spokesperson for Flybe said: “The board does not believe that the indicative proposal is executable in the timeframe required to enable Flybe to continue to trade. Accordingly, the board emphasises to shareholders that it continues to regard the arrangements entered into with Connect Airways as being the only viable option available to the company which provides the security that the business needs to continue to trade successfully. The arrangements with Connect Airways preserve the interests of Flybe’s stakeholders, customers, employees, partners and pension members.”
Bateleur Capital is, like Cyrus Capital Funds, a New York fund. It says its business model “combines a long-term patient investment approach with the ability to invest opportunistically in order to take advantage of market inefficiencies and dislocations”. The Connect Airways deal for Flybe is due to be finalised tomorrow.
Flybmi, another UK regional airline unrelated to Flybe, went into administration on Saturday citing uncertainty over Brexit as a reason for its collapse.