Flybe Sale – No done deal

As Business365 went to press the future of air services between the Isle of Man and UK airports, currently operated by Flybe, remained undecided.

A crucial meeting of shareholders, scheduled for March 4th, will decide whether to back a sale to a consortium led by Virgin Atlantic and Stobart Air, or face the winding up of the cash-strapped company.

It’s a stark choice for shareholders – to accept a deal that values the shares at just a penny each, or lose everything if the airline is wound up.

The plan to sell the business to the Connect Airways Group (of which Virgin and Stobart are a part) was agreed in principle in January. However, such was the critical state of Flybe’s finances that its Board entered into a separate agreement to sell its operating subsidiaries to Connect for a sum of around £2.8 million. That element of the deal was expected to be finalised on February 22nd – without a requirement for shareholder approval.

Whilst the sale of the airline to Connect still seems the most likely outcome it’s by no means a done deal. In the meantime the Manx Government holds its breath at the prospect of losing a company that operates key routes to Liverpool, Manchester and Birmingham. Flybe had also announced plans to re-open a base in the Isle of Man from April this year.

Flybe’s woes are connected to a range of issues affecting the airline industry including fuel and currency volatility and the poor economic outlook, which had led to subdued demand.

The Connect Airways group behinds the offer for Flybe is made up of Virgin (30 per cent), Stobart (30 per cent) and Cyrus Capital Partners (40 per cent).  Connect’s offer was valued at  around £2.8 million.

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