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Troubled Flybe rescued in cut-price takeover deal

Sky News logo Sky News 5 days ago
a helicopter flying in the air: Although small in financial terms, Flybe is one of the UK's best-known airline brands © Getty Although small in financial terms, Flybe is one of the UK's best-known airline brands

A takeover has been agreed of the troubled regional airline Flybe in a £2.2m deal by a consortium led by Richard Branson's Virgin Atlantic.

The move, previously revealed by Sky News' Mark Kleinman, offers just 1p per share, significantly less than the company's closing price of 16.38p on Thursday.

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Shares were 90% down on market opening, reflecting the massive markdown in the value of the company.

The consortium, which includes Stobart Group and Cyrus Capital Partners, will form a new airline group.

EXETER, ENGLAND - OCTOBER 18: A Flybe airline sign is pictured at Exeter Airport near Exeter on October 18, 2018 in Devon, England. The value of shares in the Exeter-based airline Flybe, have fallen dramatically recently after the company issued another profit warning, blaming poor demand, a weaker pound and higher fuel costs.(Photo by Matt Cardy/Getty Images) © 2018 Getty Images EXETER, ENGLAND - OCTOBER 18: A Flybe airline sign is pictured at Exeter Airport near Exeter on October 18, 2018 in Devon, England. The value of shares in the Exeter-based airline Flybe, have fallen dramatically recently after the company issued another profit warning, blaming poor demand, a weaker pound and higher fuel costs.(Photo by Matt Cardy/Getty Images) Flybe will combine with Stobart Airways in a joint venture called Connect Airways.

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

Under the deal, the three firms will also provide a £20 million bridge loan to Flybe and £80 million of further funding to the combined group.

The takeover comes less than two months after Flybe put itself up for sale, blaming currency volatility, rising fuel costs and Brexit-related uncertainty.

Although small in financial terms, Flybe remains one of the UK's best-known airline brands, carrying thousands of passengers between mainly regional UK airports as well as European destinations.

Flybe Embraer ERJ-195LR (ERJ-190-200 LR) with registration G-FBEG is landing at Amsterdam Schiphol International Airport in the mist in The Netherlands. Flybe connects Amsterdam to Birmingham, Doncaster Sheffield, East Midlands, Exeter, London City, Manchester and Southampton. The airline has a fleet of 78 aircraft. Flybe is suffering of financial difficulties and there are talks with Virgin to buy - rescue the airline. (Photo by Nicolas Economou/NurPhoto via Getty Images) © Nicolas Economou/NurPhoto Flybe Embraer ERJ-195LR (ERJ-190-200 LR) with registration G-FBEG is landing at Amsterdam Schiphol International Airport in the mist in The Netherlands. Flybe connects Amsterdam to Birmingham, Doncaster Sheffield, East Midlands, Exeter, London City, Manchester and Southampton. The airline has a fleet of 78 aircraft. Flybe is suffering of financial difficulties and there are talks with Virgin to buy - rescue the airline. (Photo by Nicolas Economou/NurPhoto via Getty Images) Flybe chief executive Christine Ourmieres-Widener said: "Flybe plays a vital role in the UK's transport infrastructure with a UK regional network which positions it well to benefit from growing demands from long haul carriers for passenger feeder traffic.

"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 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.

Flybe Embraer ERJ-195LR (ERJ-190-200 LR) with registration G-FBEG is landing at Amsterdam Schiphol International Airport in the mist in The Netherlands. Flybe connects Amsterdam to Birmingham, Doncaster Sheffield, East Midlands, Exeter, London City, Manchester and Southampton. The airline has a fleet of 78 aircraft. Flybe is suffering of financial difficulties and there are talks with Virgin to buy - rescue the airline. (Photo by Nicolas Economou/NurPhoto via Getty Images) © Nicolas Economou/NurPhoto Flybe Embraer ERJ-195LR (ERJ-190-200 LR) with registration G-FBEG is landing at Amsterdam Schiphol International Airport in the mist in The Netherlands. Flybe connects Amsterdam to Birmingham, Doncaster Sheffield, East Midlands, Exeter, London City, Manchester and Southampton. The airline has a fleet of 78 aircraft. Flybe is suffering of financial difficulties and there are talks with Virgin to buy - rescue the airline. (Photo by Nicolas Economou/NurPhoto via Getty Images) "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 chief Shai Weiss said: "Together, we can provide excellent connectivity to our extensive long haul network and that of our joint venture partner, Delta Air Lines, at London Heathrow Airport and Manchester Airport for the benefit of our customers.

"In the near future, this will only increase, through our expanded joint venture partnership with Air France-KLM."

EXETER, ENGLAND - OCTOBER 18: A Flybe airline flag is pictured at Exeter Airport near Exeter on October 18, 2018 in Devon, England. The value of shares in the Exeter-based airline Flybe, have fallen dramatically recently after the company issued another profit warning, blaming poor demand, a weaker pound and higher fuel costs.(Photo by Matt Cardy/Getty Images) © 2018 Getty Images EXETER, ENGLAND - OCTOBER 18: A Flybe airline flag is pictured at Exeter Airport near Exeter on October 18, 2018 in Devon, England. The value of shares in the Exeter-based airline Flybe, have fallen dramatically recently after the company issued another profit warning, blaming poor demand, a weaker pound and higher fuel costs.(Photo by Matt Cardy/Getty Images) Warwick Brady, chief executive of Stobart Group said "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."

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