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Is Flybe to be taken over by Stobart Group?

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Flybe‘s share price jumped on Friday after Stobart Group announced that it was considering a bid for the company.

Flybe – which uses Avios as its reward currency – has been struggling in recent years, despite carrying 8m passengers per annum and operating more UK domestic flights than any other airline.

Stobart Group to buy Flybe

The share price was 295p at the time of the 2010 IPO but has since lost 85% of its value and now has a market cap of just £100m.  British Airways, which acquired a stake in the company as part-payment for the BA Connect regional operation, sold down its shares a number of years ago.

The company was arguably a dead duck from the point in 2014 when it was forced to sell its Gatwick slots to easyJet in order to raise cash.

Stobart Group already operates Flybe flights under a franchise deal from the Isle of Man and London Southend, which it owns.  It is also likely to use the brand for services from Carlisle Lake District airport which Stobart to about to re-open to passenger flights.

Under Stock Exchange rules, Stobart Group has until 22nd March to make a formal takeover offer.

Comments (80)

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  • Alan says:

    OT but its been mentioned a couple of times. Is the Amex travel offer (50 off 200) to be booked by the end of the month or for travel by the end of the month?
    Still trying to sort out my New York accommodation for August.

  • Johntypop says:

    Could it not be a ‘spend to save’ initiative?

  • RIccatti says:

    BA cost cutting effort – an example of complex system, where through chains of positive and negative feedback (or even dynamic results of rules), the consequences are unintended.

    Fitting more seats and removing other amenities because of weight reasons — deadweight if those new rows of seats fly empty.

    • Rob says:

      …. although adding in rows of extra seats brings down CASK – even if empty – because you are allocating your costs over a greater number of ‘available seat kilometres’. This might even be a reason for doing it.

      Adding more and more seats is illogical because, on existing routes, supply does not create demand. More people will not decide to fly to Berlin just because BA puts another 12 seats on every plane. This means that those 12 seats will be sold at BELOW the current lowest cost so the extra yield is low.

      (Put another, for a given flight there are 10 people who will pay £200, 50 people who will pay £100, 50 people who will pay £50 and 50 people who will pay £30. Adding another 12 seats means you have to sell them for £30 or less.)

      The risk is that adding 12 seats to sell at £30 displaces one of the people who pays £200 because they no longer want to be on such a cramped aircraft.

      • RIccatti says:

        An excellent point, Rob! Will not be surprised an inch if adding seats meant to improve CASK metric — key metrics worth hundred of millions of market valuation, and proportionally millions and tens of millions extra in stock compensation to the top echelon.

        Yes, the surplus (yield) that the airline has a potential to extract is concave (you might have a crowd ready to buy 100 seats for £15 but you don’t have an anticipating crowd of takers for £600).

        To generate demand (ie, persuade more people to take a holiday in Berlin who don’t have a reason to travel otherwise) the prices have to drop below the floor. Regular availability of cheap seats in this high density world — means that you train customer habit/expectation to pay less.

      • Pangolin says:

        Load Factor (RPK/ASK) won’t look so great though.

  • George says:

    OT (sorry): does anyone know how to track redemption availability for Delta with VA miles? Planning a complex RTW route that requires Delta for the connecting chunk and VA say their award space doesn’t open up until 180 days. I have ExpertFlyer pro but not sure what I should be searching for!

  • Alex W says:

    A flick through the presentation and the stand out figure for me is the 2017 operating profit.

    3 BILLION EUROS.

    Show me the f’ing money indeed. Cutting costs might boost their profits even further in the short term, but for how long?

  • Ben says:

    O/T – if I check-in online for a BA flight leaving from LHR T3 (HLO) how early can I access the CX and QF lounges? Will they hesitate to let me in if I arrive (not transfer) 4 hours before the flight leaves?

    • Alex W says:

      Check the opening times in the Lounge Buddy app. If they don’t let you in early you could go to the BA lounge for a bit then move across later.

    • Lumma says:

      I was booked on a BA flight that departed at 11.25am. The Cathay lounge accepted me with no questions asked around 7am (can’t remember exactly when I entered, but I left just as the Qantas lounge was opening, but then decided I didn’t want to be the first person in, so went to have a quick look in the BA one)

  • Ant says:

    OT; Has anyone used the Mews of Mayfair Amex offer? I do like the venue but i am not sure if the offer covers all the outlets or it has to be at a specific one. We would like to use the offer at the pizzeria.

  • wally1976 says:

    OT: Virgin ISAs…I’ve cancelled the Direct Debits to wife and my Virgin ISA accounts. If I want to take advantage of any points promos for these in the upcoming 2018/19 tax year can I just open new ones or do I need to either empty the old ones or do I need to actually close the old ones? Not sure of the usual terms (appreciate they could change of course).

    Thanks.

    • Genghis says:

      I’ve taken advantage of the offer for the past few years but have always withdrawn the balance as needed the cash for other stuff. If I wanted to keep the investments, Virgin are just too expensive.

      • wally1976 says:

        Thanks Genghis – have you just emptied the accounts out or actually closed them? I think once in the past I just emptied it out (which is easier as it can be done online) but then they said it couldn’t be closed because it had a zero balance!?

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