The Boards of Flybe and Connect Airways, a company bringing together Virgin Atlantic Limited, Stobart Group and Cyrus Capital, have, it is reported, reached agreement to buy the regional airline.
The combined group will operate independently to Virgin Atlantic under one management team, owned 40 per cent by Cyrus Capital Partners, 30 per cent by Stobart Aviation, a wholly owned subsidiary of Stobart Group, and 30 per cent by Virgin Atlantic Limited, the holding company of Virgin Atlantic Airways and Virgin Holidays
The deal was first reported by Sky and apparently will involve the new consortium running Flybe’s flights alongside those provided by Stobart Air. For Virgin the new arrangement will provide a network of feeder flights from around the UK, including Belfast, to support its international business.
The takeover comes just two months after Flybe put itself up for sale as it struggled to cope with falling profits, a weaker pound and rising oil prices. Flybe is one of the UK’s best known airline brands, carrying thousands of passengers between largely second tier UK airports and European destinations.
Stobart is understood to be contributing the assets of Stobart Air rather than any cash in exchange for its stake. For Virgin Atlantic, control of Flybe’s regional network will provide a valuable feed into its long-haul flights to international destinations.
Flybe also has access to valuable take-off and landing slots at London Heathrow Airport which are ring-fenced for domestic flights. The two carriers already operate a code-share pact aimed at improving access to Virgin Atlantic’s long-haul routes for regional customers using the regional airline’s flights into Heathrow and Manchester.
The transaction remains subject to regulatory approvals, which could be affected by a no-deal departure by the UK from the European Union.
It’s understood Flybe will continue as an independent operating carrier with a separate UK Air Operator Certificate (AOC) under the Virgin Atlantic brand. Flybe will continue to serve customers and communities across the UK and Ireland and in due course will be rebranded to Virgin Atlantic.
Flybe CEO Christine Ourmieres-Widener said: “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. We aim to provide an even better service to our customers and secure the future for our people.”
Virgin Atlantic CEO Shai Weiss said: “We are pleased to have this opportunity to partner with Stobart Group and Cyrus Capital to bring Virgin Atlantic service excellence to Flybe’s customers. Together, we can provide greater connectivity to our extensive long haul network and that of our joint venture partners Delta Air Lines, at Manchester Airport and London Heathrow.
“In the near future, this will only increase, through our expanded joint venture partnership with Air France-KLM.”