Virgin and Stobart agree to buy Flybe in £2.2m rescue deal to save cash-strapped airline

Flybe put itself up for sale in November 2018 after warning it could lose £22million under growing financial pressure including poor demand and soaring fuel prices. The companies, in conjunction with hedge fund Cyrus Capital Partners, have agreed an offer of just 1p per share for Flybe, which put itself up for sale in November. The new venture will take the name of Connect Airways, of which Virgin Atlantic and Stobart Group will each take a 30 percent share. Cyrus Capital Partners will own the remaining 40 percent stake.

The three companies have committed to make a £20 million bridge available to support Flybe’s current operations, while an additional £80 million will be provided to the combined group.

Flybe chief executive Christine Ourmieres-Widener said the firm had been forced to seek a buyer due to higher fuel costs, currency fluctuations and Brexit uncertainty.

She said: ”We have been affected by all of these factors which have put pressure on short-term financial performance.

“At the same time, Flybe suffered from a number of legacy issues that are being addressed but are still adversely affecting cashflows.

“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.”

Flybe remains one of Britain’s best known airline brands, flying thousands of passengers across the UK and Europe every year.

The carrier had a fleet of 78 aircrafts in September, but it promised investors to further reduce it to focus merely on the most popular routes.

Virgin Atlantic’s new financial venture would come five years after Mr Branson launched Little Red, a small airline aiming at cracking the UK market.

However, the small carrier ended its operation just 18 months later.

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Virgin group said in a statement at the time: “Little Red has unfortunately not been able to make a positive contribution to Virgin Atlantic’s network.”

Mr Branson himself blamed the failure on the “meagre package of slots” with which Little Red had operated.

Source
Daily Express :: City and Business Feed
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