Virgin Atlantic has a 30 per cent stake in the venture, as does Stobart Group – whose Irish-based airline, Stobart Air, already operates some of its flights under the Flybe brand.
A hedge fund, Cyrus Capital Partners, has the remaining 40 per cent share in a group called Connect Airways. However, Flybe will be re-named after Sir Richard Branson’s airline.
Join Independent Minds
For exclusive articles, events and an advertising-free read for just
Get the best of The Independent
With an Independent Minds subscription for just
Virgin’s chief executive, Shai Weiss, vowed “to bring Virgin Atlantic service excellence to Flybe’s customers”.
The buyers will provide an immediate injection of £20m to provide liquidity and keep the heavily loss-making carrier afloat. They will also make up to £80m available in further funding.
When Flybe floated in 2010, the airline’s market capitalisation briefly reached £250m.
The airline is currently losing £7,000 per hour, as it heads to predicted full-year losses of £12m. Flybe’s chief executive, Christine Ourmières-Widener, blamed high fuel costs, currency fluctuations and “significant uncertainties presented by Brexit” for the airline’s performance.
“By combining to form a larger, stronger, group, we will be better placed to withstand these pressures,” she said. ”We aim to provide an even better service to our customers and secure the future for our people.”
The acquistion statement made no promises about the future route network, saying only: “Flybe will continue to serve customers and communities across the UK and Ireland.”
The carrier began life as Jersey European in 1979, and continues to serve as the main airline between the Channel Islands and Britain.
If the takeover goes through, these links – as well as Flybe’s core mainland British network – are likely to continue.
The airline operates from Aberdeen, Edinburgh and Glasgow to Manchester, East Midlands, Birmingham, Bristol, Southampton and Exeter. It also has a busy network to and from Belfast City.
But some of Flybe’s non-core routes – such as Cardiff to Milan, Doncaster to Alicante and Leeds Bradford to Dusseldorf – may not survive a cull if the new owners continue the current “shrink-to-success” strategy
Flybe feeds Virgin Atlantic flights at Heathrow and Manchester, and the new venture is promising “improved connectivity” to the long-haul airline.
Virgin Atlantic ran a domestic operation called Little Red from 2013 to 2015, connecting Heathrow with Manchester, Edinburgh and Aberdeen. It folded after heavy losses.
Flybe has some valuable slots at Heathrow. It will begin a four-flight-a-day link between Heathrow and Newquay, using “remedy slots” surrendered by British Airways, in late March.