Shares in regional airline fall 90% after consortium led by Virgin offers cut-price deal
Flybe has recommended shareholders accept a cut-price £2.2m takeover offer from a consortium led by Virgin Atlantic, after the regional airline struggled with rising fuel costs, currency volatility and political uncertainty.
Virgin, part-owned by the billionaire Sir Richard Branson, has banded together for the deal with the infrastructure firm Stobart Group and the investment house Cyrus to form a joint venture, Connect Airways.
The 1p per share offer represented a big discount to the 16.38p closing price of Flybe shares on Thursday. The shares fell by 90% to 1.6p as trading opened on Friday.
Flybe’s bosses publicly put the company up for sale in November after a profit warning in October prompted plans to cut costs and reduce its flights.
Flybe, which has 78 planes, received interest from multiple parties for all or part of the business. 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.
The consortium’s bid, if accepted by shareholders, would seek to feed regional customers to the long-haul networks of Virgin Atlantic and its American joint venture partner, Delta Air Lines, at Heathrow and Manchester airports. The company said it hoped to “maintain Flybe’s current UK regional focus”.
Stobart, whose shares rose by 9% in early trading to 163.41p, said it hoped the acquisition would boost traffic at London Southend airport.