Sale of Flybe to Connect Airways Completed

 - February 24, 2019, 2:17 PM

The sale of Flybe to Connect Airways Limited, effectively a consortium of Virgin Group, Stobart, and Cyrus Capital Partners, closed on Thursday, February 21.

Originally announced on January 15, the sale includes Flybe Limited and Flybe Aviation Services Limited. Connect Airways plans to operate under the Virgin brand while retaining the existing AOCs.

The share transfer itself remains subject to a vote of shareholders on March 4 based on a cash offer offering of 1 pence per share (£0.01), but the vote is not material to the takeover now proceeding. If shareholders vote to reject the offer, Flybe Group has warned them that they might receive "no value."

"Flybe's assets and operations are now owned by Connect Airways and Flybe flights continue to operate as normal," Flybe Group said in a statement, adding that the group now operates as "a non-trading entity with no subsidiaries and no material assets other than the limited cash received under the [Sale Purchase Agreement], which is required to cover transaction, residual and rundown costs of the company." It added that it did not anticipate that any funds would remain available for distribution to shareholders.

Exeter-based Flybe ranks as the largest independent regional airline in Europe, carrying some 8 million passengers a year between 80 airports in the UK and the rest of Europe.

Stobart Air confirmed its interest in a takeover bid of Flybe in February 2018, but Flybe's board rejected the bid. However, late last year the airline’s shares fell by 75 percent, forcing the airline to consider a sale again.

In early January a takeover bid worth £2.2 million came from the Connect Airways consortium, which agreed to lend Flybe £20 million to continue operations, while making a further £80 million available once the takeover closed.

Connect Airways had to increase its offer by £600,000 to secure Flybe board approval.

Flybe said it rejected a late alternative bid from Andrew Tinkler, former Stobart CEO, and a second proposal from Mesa Air Group of the U.S., supported by Tinkler.

Connect Airways combines Flybe with Stobart Air, the new carrier having a fleet of almost 100 aircraft. Most are Bombardier Q400s, of which Flybe stood as the world's largest operator.

Its other aircraft are Embraer 195s and 175s, ordered 2005 and 2010, respectively, and a few ATR 72-600s.

In mid-2018 Flybe completed a review of its fleet requirements and in May 2018 announced that the Bombardier Q400 would remain its core aircraft. It decided to withdraw the 195s from service by 2020 but that it would keep E175s.

A consistently growing but often troubled regional airline, Flybe grew out of the rebrand of Jersey European Airways as British European Airways in 2000. A significant milestone came in March 2007, when Flybe bought BA Connect from British Airways, although the latter retained services out of London City Airport.

In December 2010 Flybe floated on the London Stock Exchange with a share price of 295 pence, making the company worth £215 million. It raised some £66 million to fund expansion. It continued to exist in much the same form until it ran into insurmountable financial difficulties in 2018.