Virgin Atlantic unveils consortium bid for Flybe – to rebrand as Virgin Atlantic!

Links on Head for Points may pay us an affiliate commission. A list of our partners is here.

A Virgin Atlantic-led consortium, Connect Airways, has announced its recommended bid for Flybe.

The offer is at just 1p per share (they were trading at 16p on Thursday) but it comes with a promise of a £100m cash injection.

The deal has been recommended by the Flybe board, but other suitors are free to make counter proposals. No major shareholders had given irrevocable acceptances in advance.

The full offer document is here (PDF).

I did an interview discussing the deal for LBC London News on Friday morning.  You can listen by clicking here (click here if you can’t see the player image):

How is the deal structured?

This is a complex deal but, at the same time, there is a certain logic to it.

It is a three-way bid comprising:

  • Virgin Atlantic (30%_
  • Stobart Group, which is contributing assets but no cash (30%)
  • a US private equity group, Cyrus Capital Partners (40%) which previously backed Virgin America

Virgin to bid for Flybe

Stobart Group will be injecting its Stobart Air business into the new company.  This already operates some Flybe routes under franchise and was formed from what used to be Irish airline Aer Arann.  You may remember that Stobart Air was publicly considering a bid for Flybe in 2018 but did not go ahead.

Stobart Group also owns London Southend airport and the offer document talks of the new airline building a strong presence at Southend.

Virgin Atlantic gets to protect its codeshare operation which was feeding a lot of business to Virgin’s Manchester hub.  Virgin is under huge pressure at Manchester from Thomas Cook and it can’t afford to lose connecting Flybe passengers.

Virgin will, presumably, also get first dibs on the Flybe slots at Heathrow.  The use of these slots is restricted, but they can soon be used for any European destination, Moscow, Cairo or Riyadh.  What Virgin will NOT be doing, hopefully, is trying to feed its Heathrow services with domestic connections, because only Terminal 2 and Terminal 5 can handle domestic flights and Virgin Atlantic is in Terminal 3.  The story of Little Red is that passengers don’t want to do this.  (Whilst BA is split between T5 and T3, the routes out of T3 are those with the lightest connecting traffic.)

I am in two minds about the wisdom of using the Virgin Atlantic brand on Flybe, given the punctuality issues and small aircraft used.  It will not necessarily have a positive halo effect on the core operation and it is difficult to see how they can ‘Virgin-ify’ it.

Virgin Atlantic acquisition of Flybe with Stobart Air

Because this is a consortium bid which will require the airline to operate on a stand-alone financial basis from Virgin Atlantic, Flybe will presumably retain its operational identity.  There is likely to be a new board but it should be business as usual for the rest of the staff.  The offer document says that the Exeter and Dublin (Stobart HQ) offices will remain.

This is clearly the end of using Avios as Flybe’s loyalty currency.  As Flybe is to be rebranded under the Virgin Atlantic brand it is clear that the new airline will be offering Virgin Atlantic tier points and Virgin Flying Club miles.  It will also be the end of Avios redemptions on Flybe.

More as we get it …..

(Want to earn more Avios?  Click here to visit our home page for the latest articles on earning and spending your Avios points and click here to see how to earn more Avios from current offers and promotions.)

BACK AGAIN: Get 3,000 Avios or other miles with the Heathrow Rewards sign-up bonus
How many tier points does each British Airways route earn? Introducing HFP's British Airways tier point calculator
Click here to join the 13,000 people on our email list and receive the latest Avios, miles and points news by 6am.

Amazon ad
About Head for Points

We help business and leisure travellers maximise their Avios, frequent flyer miles and hotel loyalty points. Visit every day for three new articles or sign up for our FREE emails via this page or the box to your right.

Comments

  1. Flybe has recently been noted as the most punctual airline in Europe…

  2. Hilary Sharman says:

    Is it safe to book with Flybe now for September flights from Exeter to Faro? I know that we can get refunds using a credit card but that leaves us at possibly a lot more expensive flights from Bristol for booking late. We love Flybe, what a shame!

  3. Londonbus says:

    I’m in Riyadh.

    It’s a very odd destination. Ex-UK it’s business traffic only (no-one comes here for a holiday). Ex-RUH it’s a mixture of business and leisure traffic.

    Prices ex-UK are pretty high. I’m surprised no-one has to tried to compete with BA or Saudia.

    Ex- RUH BA offers good deals providing you avoid peak days (Fridays/Saturdays) and you have a 3 day minimum stay.

    BA also has a lot of US traffic – none of the US airlines serve here and so BA feeds the JBA transcon routes.

Please click here to read our data protection policy before submitting your comment.