Flybe has announced it is being sold to a consortium involving Virgin Atlantic Airways.
Virgin Atlantic has a 30 percent interest in the consortium along with the Stobart Group. Stobart Air already operates flights under the Flybe brand.
This will be the end of the Flybe brand. The airline will be rebranded under the Virgin Atlantic brand.
Cyrus Capital Partners, a hedge fund, will control the remaining 40 percent share the consortium called Connect Airways.
Flybe issued this formal statement:
RECOMMENDED CASH OFFER for FLYBE GROUP PLC by CONNECT AIRWAYS LIMITED
(a company jointly-owned by DLP Holdings S.à. r.l., Stobart Aviation Limited and Virgin Travel Group Limited, a wholly-owned subsidiary of Virgin Atlantic Limited)
- Following the announcement on November 14, 2018 and the launch of the Formal Sale Process with respect to Flybe, the Boards of Flybe and Connect Airways announce that they have reached agreement on the terms of a recommended cash offer for Flybe by Connect Airways pursuant to which Connect Airways will acquire the entire issued and to be issued share capital of Flybe.
- Under the terms of the Acquisition, Flybe Shareholders will be entitled to receive:
one (1) pence in cash for each Flybe Share
which values the entire issued and to be issued share capital of Flybe at approximately £2.2 million on the basis of the fully diluted share capital of 216,656,776 Flybe Shares.
- Cyrus, Stobart Group and Virgin Atlantic have engaged with Flybe in a collaborative due diligence process since the commencement of the Formal Sale Process, and have formulated the Offer Price after careful review of the due diligence information, the capital needs of Flybe, the challenging trading environment and prevailing market conditions.
- Concurrently with announcing the Acquisition, Cyrus, Stobart Group and Virgin Atlantic have committed to make available a £20 million bridge loan facility to support Flybe’s ongoing working capital and operational requirements.
- In addition, following completion of the Acquisition, Cyrus, Stobart Group and Virgin Atlantic are intending to provide up to £80 million of further funding to the Combined Group to invest in its business and support its growth, as well as a contribution of Stobart Air.
- It is intended that the Acquisition will be effected by means of a Court-sanctioned scheme of arrangement between Flybe and the Scheme Shareholders under Part 26 of the Companies Act.
- The Acquisition is subject to a number of Conditions and further terms, including the approval of the Scheme by the Scheme Shareholders by the requisite majorities and the sanctioning of the Scheme by the Court. The Conditions are set out in full in Part A of Appendix 1 to this Announcement.
- Connect Airways is a joint venture company the share capital of which is owned 40% by DLP Holdings, S.à. r.l., a company wholly-owned by funds managed by Cyrus, 30% by Stobart Aviation, a wholly-owned subsidiary of Stobart Group, and 30% by Virgin Travel Group Limited, a wholly-owned subsidiary of Virgin Atlantic, the holding company of Virgin Atlantic Airways Limited and Virgin Holidays Limited.
- It is also expected that, immediately prior to completion of the Acquisition, Connect Airways will acquire Stobart Air, Stobart Group’s regional airline and aircraft leasing business. The combined group is expected to bring benefits to customers, suppliers and employees, providing stability in a tough trading environment.
- Combined Group
- Cyrus, Stobart Group and Virgin Atlantic believe that combining Flybe and Stobart Air in a more integrated commercial cooperation with Virgin Atlantic’s long-haul operations will create a fully-fledged UK network carrier under the Virgin Atlantic brand, alongside Stobart Air’s wet lease operations and aircraft leasing business which will continue to operate as it does today.
- Such a combination would be a compelling proposition with a comprehensive regional network in the UK and Ireland coupled with an enhanced European footprint, providing greater choice and connectivity for customers to travel to destinations all over the world.
- The Acquisition will enable Flybe to benefit from committed strategic investment partners in terms of Cyrus, Stobart Group and Virgin Atlantic (through Connect Airways) and from an enhanced presence at London Heathrow Airport and Manchester Airport with potential to grow further in London Southend Airport.
- The Acquisition and combination with franchise airline, Stobart Air, will provide the Combined Group with an opportunity to increase passenger numbers at London Southend Airport, accelerating its growth for UK and European air travel.
Recommendation and support for the offer
- The Flybe Board, who have been advised by Evercore (who are providing independent financial advice to the Flybe Board for the purposes of Rule 3 of the Code) as to the financial terms of the Acquisition, considers the terms of the Acquisition to be fair and reasonable. In providing its financial advice to the Flybe Directors, Evercore has taken into account the commercial assessments of the Flybe Directors.
- Accordingly, the Flybe Directors believe that the terms of the Acquisition are in the best interests of Flybe Shareholders as a whole and unanimously recommend that Flybe Shareholders vote in favour of the resolutions to be proposed at the Court Meeting and the Flybe General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure the acceptance of such Takeover Offer).
This revised 2018 livery will be very short-lived (just one aircraft):
The Boards of Flybe and Connect Airways, a company bringing together Virgin Atlantic Limited, Stobart Group and Cyrus Capital, are pleased to announce that they have reached agreement on the terms of a recommended cash offer for Flybe. Following which Connect Airways will acquire the entire issued, and to be issued, share capital of Flybe. Stobart Group will contribute Stobart Air and Propius, Stobart’s aircraft leasing business into Connect Airways.
Concurrently with announcing the Acquisition, Cyrus, Stobart Group and Virgin Atlantic have committed to make available a £20 million bridge loan facility to support Flybe’s ongoing working capital and operational requirements.
In addition, following completion of the Acquisition, Cyrus, Stobart Group and Virgin Atlantic are intending to provide up to £80 million of further funding to the Combined Group to invest in its business and support its growth, as well as a contribution of Stobart Air.
Flybe will continue to serve customers and communities across the UK and Ireland. In due course Flybe will be rebranded to Virgin Atlantic.
The Combined Group will offer significant benefits for customers:
- Deliver more choice to customers by linking UK regions and Ireland to Virgin Atlantic’s extensive long-haul network through improved connectivity at Manchester Airport and London Heathrow
- Provide a strong foundation to secure the long-term future of Flybe, its customers and its people by leveraging the combined commercial, operational and functional expertise and scale of Virgin Atlantic and Stobart Group
- Utilise the strength of the Virgin Atlantic brand, and the offer of an enhanced customer experience in keeping with Virgin Atlantic’s heritage
- Provide the Combined Group with an enhanced presence at Manchester Airport , London Heathrow Airport, with the potential to grow further in London Southend Airport
The Combined Group intends for Flybe to continue as an independent operating carrier with a separate UK Air Operator Certificate (AOC) under the Virgin Atlantic brand. Stobart Air is intended to continue under a separate Irish AOC.
The Combined Group will operate independently to Virgin Atlantic under one management team, owned 40% by Cyrus Capital Partners, 30% by Stobart Aviation, a wholly owned subsidiary of Stobart Group, and 30% by Virgin Atlantic Limited, the holding company of Virgin Atlantic Airways and Virgin Holidays.
Christine Ourmieres-Widener, Flybe’s CEO 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.”
Shai Weiss, CEO of Virgin Atlantic 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.”
Warwick Brady, CEO of Stobart Group 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.”
Lucien Farrell, Partner of Cyrus said:
“We are delighted to be working once again with the Virgin Group following our successful partnership in the launch and eventual sale of Virgin America to Alaska Airlines. We believe Flybe’s strong market position and high quality management together with Virgin Atlantic’s dedication to the best customer experience and Stobart Group’s expertise in regional flying will produce a worldclass airline.