Virgin Atlantic-led consortium to buy distressed airline Flybe for £2.2 million
Share in the troubled UK regional air carrier has plummeted more than 90% helping to attract buying interest from Richard Branson-led consortium.
Connect Airways, a consortium comprised of Virgin Atlantic, Stobart Group and US private equity firm Cyrus Capital Partners, has agreed to acquire distressed UK regional airline Flybe for £2.2 million.
The deal values the airline at a significant discount to its current market value which stands at £35.49 million, with Flybe forced to put itself up for sale after its share price plummeted in mid-October.
The UK regional airline has seen its share price fall as much as 90%, sliding from 42p a share in September to sit a touch under 3p on Friday.
‘Flybe plays a vital role in the UK’s transport infrastructure with a UK regional network which uniquely positions it to benefit from growing demands from long haul carriers for passenger feeder traffic,’ Flybe CEO Christine Ourmieres-Widener said.
‘However, the industry is suffering from higher fuel costs, currency fluctuations and significant uncertainties presented by Brexit.’
‘By combining to form a larger, stronger, group, we will be better placed to withstand these pressures,’ she added.
Flybe deal structure
The Virgin Atlantic-led consortium will lend £20 million in emergency funds to keep the beleaguered Flybe afloat, with a further £80 million invested in the airline post-completion of the deal to drive growth.
As part of the new growth strategy, Flybe’s network will be altered to improve connectivity with Virgin Atlantic’s long-haul flights out of London Heathrow and Manchester airports, according to a document on the acquisition.
‘All flying operations except Stobart Air will operate under the Virgin Atlantic brand to the extent possible,’ the document said.
‘This will be timed to coincide with a refurbishment programme for Flybe’s fleet to provide a seamless customer experience in keeping with Virgin Atlantic’s heritage.’
‘There will be no change to the brands under which Stobart Air flies today which will continue to be maintained and operated separately,’ it added.
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