Flybe brand to disappear as Virgin Atlantic and Stobart Group agree takeover

  • Flybe brand to disappear as Virgin Atlantic and Stobart Group agree takeover

Flybe brand to disappear as Virgin Atlantic and Stobart Group agree takeover

Flybe is being bought for £2.2m by a consortium including Virgin Atlantic and Stobart Group.

Stobart confirmed that Flybe's finances have been increasingly squeezed in recent weeks.

Several European carriers have succumbed to the rising cost of fuel.

Stobart owns London Southend Airport and a year ago secured a significant coup when it announced that Ryanair will establish a base at the gateway from this summer, operating 13 routes to eight countries.

The boardroom conflict quickly moved into the courtroom, with both Mr Tinkler and Stobart suing each other amid allegations relating to millions of pounds of expenses claims and vote-rigging at a company shareholder meeting.

Virgin Atlantic will count itself the victor after reports of a bidding war between Sir Richard Branson and International Airlines Group boss Willie Walsh sent Flybe shares rocketing back up in late November.

The group, which includes infrastructure specialist Stobart and investment firm Cyrus Capital Partners, said in a statement that their joint venture Connect Airways will pay just one pence per share under the deal. Shares in the airline plummeted following the news, closing down 77.1% to 3.75p.

It was unclear what price Mr Tinkler had paid for the stake, who he had acquired it from and whether he planned to make any further purchases.

The proposed sale of Flybe at such a knockdown price underscores the aviation sector's huge financial challenges. Easyjet, a rival in some of the regional routes Flybe operates, had been seen as a contender, after Stobart Group walked away from a bid for the airline in March. It flies to more than 30 British airports.

Cyrus will own 40% of the new company, while Virgin and Stobart will take 30% apiece.

A spokesperson for Virgin Atlantic said the Flybe rebrand would coincide with a refurbishment program of its fleet.

"Such a combination would be a compelling proposition with a comprehensive regional network in the United Kingdom and Ireland, coupled with an enhanced European footprint, providing greater choice and connectivity for customers to travel to destinations all over the world", it added.

Under the terms of the transaction, Stobart Aviation will enter into two further agreements to dispose of the entire issued share capital of each of Everdeal Holdings - the holding company of Stobart Air - and Propius Holdings, which operates as Stobart Aviation's aircraft leasing business.

Its return to the domestic United Kingdom aviation market will come four years after announcing the closure of Little Red, its previous attempt to make money from a notoriously hard sector. We have been affected by all of these factors which has put pressure on short-term financial performance.

A spokesman for Mr Tinkler declined to comment.