Cash-strapped regional carrier Flybe is being bought for £2.2 million by a consortium including Virgin Atlantic and the Stobart Group.
Shareholders in Flybe will receive 1p a share, while the consortium, which also includes venture capital firm Cyrus, will inject £100 million into the airline.
The airline will then operate under the Virgin Atlantic brand and the consortium will be known as Connect Airways. It will initially lend £20 million to Flybe to support the on-going operations of the airline and then invest a further £80 million.
It will operate independently to Virgin Atlantic under one management team, owned 40 per cent by Cyrus Capital Partners, 30 per cent by Stobart Aviation, and 30 per cent by Virgin Atlantic Limited.
The sale comes after Flybe issued a warming in October that it would lose £22 million due to poor demand, a weaker pound and higher fuel costs.
Flybe’s chief executive officer, Christine Ourmieres-Widener said: “Flybe plays a vital role in the UK’s transport infrastructure with a UK regional network which uniquely positions it to benefit from growing demands from long haul carriers for passenger feeder traffic.
“We have successfully implemented a clear strategy in recent years focused on tighter fleet management, improving revenue per seat and increasing load factors. The pursuit of operational excellence has reduced maintenance times and increased efficiencies and customer satisfaction.
“However, the industry is suffering from higher fuel costs, currency fluctuations and significant uncertainties presented by Brexit. We have been affected by all of these factors which has 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.”
Virgin Atlantic CEO, Shai Weiss said: “The Virgin Atlantic brand is built on the foundation of putting customers at the heart of everything we do, providing them with the choice they deserve and a travel experience they love. All possible because of our amazing people.
“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.”
Stobart Group CEO, Warwick Brady said: “The Board of Stobart Group believes that bringing Stobart Air together with Flybe and partnering with Virgin Atlantic and Cyrus Capital is the best way for us to play an active role in regional airline consolidation.
“The combined entity will be a powerful combination with sufficient scale to compete effectively in the UK and European airline markets. It will allow us to continue to work with Flybe and provides an excellent opportunity to continue to grow passenger numbers at London Southend Airport.”