Maximise your Avios, air miles and hotel points

Flybe surprise update: sale to Virgin Atlantic consortium restructured, deal done

Links on Head for Points may support the site by paying a commission.  See here for all partner links.

There was a major development in the Flybe takeover saga this morning.

It appears that the subsidiary of the quoted company, Flybe Group plc, which runs the airline has been sold to the Virgin Atlantic / Stobart Group consortium subject to a limited number of conditions.  Final completion is expected by 22nd February.

The price was £2.8m.  This compares to the original £2.2m offer for the quoted company.

This means that, whilst Flybe Group plc will remain a quoted company, it seems it will be a shell with no trading assets of note.  The sale to the Virgin-led consortium appears to be a done deal and Flybe shareholders will not have an opportunity to vote on the transaction.  The remaining shell of the PLC will still be acquired by the consortium at a future date so shareholders should still receive a payment.

The reason behind this appears to be that Flybe Group failed to meet the conditions attached by the banks to the £20m bridge loan that the consortium had offered.  This new structure allows half of the bridging loan to be released immediately.

Here is the announcement:

Flybe Group plc (“Flybe” or the “Company”)

Offer Update

On 11 January 2019, Connect Airways Limited (“Connect Airways”) announced a recommended cash offer (the “Recommended Offer”) for all of the issued and to be issued share capital of Flybe Group plc (“Flybe”).

Together with the announcement of the Recommended Offer, Flybe entered into a secured bridge loan facility (the “Bridge Facility Agreement”) with the shareholders of Connect Airways (the “Consortium”) pursuant to which the Consortium agreed to make available to Flybe a committed credit facility of up to £20 million, subject to a number of conditions. Despite significant efforts it has not been possible to satisfy these conditions and so Flybe has been unable to draw any funds under the Bridge Facility Agreement.

Divestment of Flybe Limited (including Flybe Aviation Services Limited) and Flybe.com Limited and agreement on a Revised Bridge Facility

In light of the above, the Board of Flybe and Connect Airways are pleased to announce that they have reached agreement on:

  • the purchase by Connect Airways of the Group’s main trading company, Flybe Limited (including Flybe Aviation Services Limited) and the digital company Flybe.com Limited for £2.8 million (the “Divestment”), subject only to a limited number of conditions; and
  • a revised Bridge Facility of up to £20 million to provide funding to Flybe Limited, of which £10 million will be released today to support the business. In addition, a number of improved agreements with banks have also been reached today to improve liquidity.

Furthermore, the Consortium has confirmed to Flybe that its plans for the future of the Flybe business including the combination with Stobart Air remain as set out in the Recommended Offer including its commitment to provide £80 million of further funding.

Flybe confirms that following its transfer to a Standard Listing which becomes effective on 17 January 2019, the Divestment will not require shareholder approval. The long stop date for the Divestment is 22 February 2019.

The Board of Flybe believes that obtaining this revised facility from the Consortium provides the security that the business needs to continue to trade successfully. This preserves the interests of its stakeholders, customers, employees, partners and pension members.

Status of recommended offer by the Consortium for Flybe

Shareholders should note that the Recommended Offer announced on 11 January 2019 will proceed irrespective of the Divestment. Further communications will be made as appropriate.

Category

Virgin Atlantic and Flying Club

Comments (54)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • TripRep says:
    15 Jan15 January 09:53

    So how soon do we expect to see Virgin livery, and the ability to redeem VS miles?

    • Michael Jennings says:
      15 Jan15 January 10:21

      I’m interested to see what they do with the fees and taxes on short haul redemptions. If they match BAs cap, there will potentially be lots of interesting and useful redemptions. If not, less so.

      • Rob says:
        15 Jan15 January 11:40

        The problem with Flybe is that a domestic flight incurs two lots of APD. That’s your £35 gone already. BA can write this off because domestics are a small % of short-haul, less so for Flybe. With little direct competition between Flybe and BA I doubt they will feel the need to cap charges unless it is a marketing gimmick.

        • Chrisasaurus says:
          15 Jan15 January 20:28

          Well sort of but that’s only important if you fetishise APD as BA seem to do. Who else picks a specific charge/tax/levy/duty and seperates it out as much as this?

          Sure, plenty of businesses make a stink about their particle levy, for example the monkey running Wetherspoons endlessly moaning about duty on beer, but in this example BA aren’t charging £35 are they – they’re charging £35 plus a number of Avios.

          APD is a cost of sale like all the others, at least it’s predictable.

    • Stu N says:
      15 Jan15 January 12:31

      On livery, I wouldn’t get excited. There’s a few of the Flybe fleet still kicking around in the old white and pale blue livery. Most of the fleet are purple (bet that’s going to be a pain to paint over) but this is already superseded by a white with purple tail. None really lend themselves to a quick repaint.

      • Claire says:
        15 Jan15 January 14:33

        AFAIK you remove the old paint then respray 😉 saves weight…

        • Claire says:
          15 Jan15 January 14:38

          I was imagining a minimal branding paint over too – luckily the many Flybe cabins I’ve flown already have purple mood lighting filters…

  • BlueThroughCrimp says:
    15 Jan15 January 10:14

    So Connect compete (albeit in a small way) with Virgin West Coast on the Anglo-Scottish market.
    Will be interesting if Virgin/Stagecoach were to lose that franchise come March 2020.

    • Andre says:
      15 Jan15 January 11:47

      Along with Caledonian Sleeper, Cross Country, LNER & Transpennine Express.

      • Charlieface says:
        15 Jan15 January 14:21

        TPX to a much lesser extent.

        @BlueThroughCrimp: There’s not actually much significance in this, Virgin Group has 51% in VWC, and only 30% in V. Atlantic, which in turn holds only 30% (?) of the new Connect.

  • Omba says:
    15 Jan15 January 10:22

    So its safe to book a FlyBe flight for the summer then??!

    • Rob says:
      15 Jan15 January 11:39

      The airline will still be here, yes, and hopefully they won’t mess around with the schedules in the short term.

  • Chris L says:
    15 Jan15 January 10:22

    I for one think this is hugely exciting because the bigger, better Virgin Atlantic will be more of a force to be reckoned with against BA. I think this will also give VA more opportunity to develop their long haul operation from Manchester and potentially Glasgow, given that these hubs will now have much more scope for domestic connections. Ultimately, competition is better for us, the consumers.

    • Barry says:
      15 Jan15 January 11:49

      +1

    • Nick_C says:
      15 Jan15 January 13:19

      Will it make much difference to BA? People flying from the regions are likely to be going via AMS anyway. Expansion by VA in the North would be good news for people who are not within easy reach of LHR, not such good news for KLM though.

      It would be great to see more direct long haul flights from airports other than LHR.

      • TripRep says:
        15 Jan15 January 13:30

        Nick, you assume too much.

        I fly from the region’s, been years since I went through AMS.

        The ability to redeem miles on one ticket with VS (inc domestic connection) is very appealing.

        • Alan says:
          15 Jan15 January 13:35

          Definitely – it’s quite a pain having to book separate tickets just now (same for SQ – both offer codeshare but only on cash tickets).

        • Graeme says:
          15 Jan15 January 18:49

          +1 from someone in ABZ. Redeem miles with domestic connection ala BA will entice me to fly VS.

      • Glasgirl says:
        16 Jan16 January 07:58

        As someone from “the regions” I fly to North America a couple of times a year and have never gone through AMS (usually LHR, LGW or DUB). I don’t think KLM have as much pull elsewhere as you’re assuming.

      • Alex Sm says:
        16 Jan16 January 18:21

        Why AMS and not let’s say DUB?

    • Michael Jennings says:
      15 Jan15 January 14:08

      Also, there is a certain type of City traveller whose long haul flights are from LHR and whose short haul flights are from LCY wherever possible. That traveller is now going to be better served by Virgin than before. It will be interesting to see what Virgin does with the LCY operation of FlyBe in that regard.

  • sigma421 says:
    15 Jan15 January 10:36

    Is it fair to assume from this that BE’s financial position was much worse than they were letting on?

    • Rob says:
      15 Jan15 January 11:38

      The credit card companies had started to hold back funds, so they were not getting the money from new bookings unless they were made on a debit card. We won’t know how much the bad publicity in recent weeks had caused bookings to dry up.

      The announcement today does imply that the bridge loan was desperately needed though.

      • Mr Dee says:
        15 Jan15 January 12:15

        Do you think that Flybe’s operations can be turned around with Virgin in control?

        • Oh Matron! says:
          15 Jan15 January 13:57

          Well, and Rob keep me on the straight and narrow:

          We probably won’t see much of an uptick in money paid out to Avios / Virgin Miles after full completion, but what we may see is an increase in revenue FROM Flying club. This is doubly important given the move of FC out of Virgin, making FC a Free standing business, from what I understand.

          We may see an uptick in Passengers: I now have more of a will to fly FlyBE if there’s a chance of earning tier points

          Add this to the benefits and economies of scale that the merger with AF / KLM will bring

          Of course, I could be talking complete bolsheviks, being biased in favour of Virgin, but that’s how I see it.

        • Rob says:
          15 Jan15 January 16:00

          Flybe has a good profitable core. The problem has been management teams who insisted on messing around with new ventures – such as taking on Loganair in Scotland – and getting carried away with aircraft orders.

          The risk now, as I see it, is that profitable routes end up sacrificed in order to run more less profitable routes to a) the Virgin hubs in Manchester and Glasgow and b) to/from airports controlled by Stobart.

      • Alex Sm says:
        16 Jan16 January 18:22

        >> “The credit card companies had started to hold back funds”

        Is that legal???

        • Rob says:
          16 Jan16 January 21:55

          Of course it is – they are legally on the hook if the airline goes bust so they have the right to protect their interests.

        • Alex Sm says:
          19 Jan19 January 15:42

          It’s very odd. So, basically they are only an intermediary between a customer and a provider of service but it’s up to them to decide whether they like / trust the provider before they hand over the money which is not even theirs! so weird….

          • Alan says:
            19 Jan19 January 20:09

            But they’re held jointly liable so if the company goes bust they’re on the hook for reimbursing all the folks that used their card. They’re assessing the creditworthiness of the company before releasing funds. Seems quite sensible to me?

  • Charlieface says:
    15 Jan15 January 14:24

    If I was a shareholder I’d be livid about this and be considering suing the executives. Thankfully I’m not so I’ll just look forward to using my VS miles on Flybe, and hopefully a new airline hub coming to MAN.

  • Brian says:
    15 Jan15 January 14:24

    I’m far from an expert, but the way the deal has been restructured, within course of being announced, suggests that flyBe is in a financial pickle. Probably much worse than the purchase announcement suggested. In all likelihood it was this deal, or receivership.

    Im not convinced that having VS on board will change things in the immediate term, it will take sever months to get the VS brand up and running. They have gained access to capital, which will count for a lot. I guess that Stobart are predicting the VS franchise will help both the point-to-pont operations and the hub operations, as it did at Aer Arann/Stobart Air.

    • Peter says:
      15 Jan15 January 17:07

      It also makes a mockery of capitalism when shareholders can be bypassed in such a way. Bit by bit the attributes of capitalism are being eroded by lawyers, who more often than not tend to operate like a bunch of socialists.

      • Brian Dromey says:
        15 Jan15 January 19:31

        Nice headline, but I believe the shareholders voted to transform flyBe PLC from a premium to ordinary listing. Therefore the directors can buy/sell parts of the business without shareholder approval. I believe the “Ayes” were >90%.

        These turkeys voted for Christmas.

      • IanMac says:
        16 Jan16 January 12:16

        +1

  • Oli says:
    15 Jan15 January 16:55

    Reassuring news, I have Flybe flights booked in February, April and May. Looking forward to be able to use my 200k Flying Blue miles on Flybe routes; living in London i’m struggling to use them on SkyTeam partners.

    • marcw says:
      15 Jan15 January 17:16

      It’s not gonna be good value… I promise you. Use the miles to fly on any SkyTeam airline. Check out their Promo Awards… they have some very juicy awards.

    • Chris L says:
      15 Jan15 January 18:07

      Not sure you can say with all certainty that it won’t be good value. If you’re flying on popular dates you can make big savings. I redeemed Avios on Flybe flights to Edinburgh on a Six Nations weekend recently. They wanted £650 to get my family there…or 18,900 Avios plus £125ish.

    • Oli says:
      15 Jan15 January 18:26

      At least it will be a good way to extend my FB miles and prevent them from expiring, which is difficult at the moment.

This article is closed to new comments. Feel free to ask your question in the HfP forums.

New to Head for Points?

Welcome!  We’re the UK’s most-read source of business travel, Avios, frequent flyer and hotel loyalty news. Let us improve how you travel. Got any questions? Ask them in our forums.

Latest Forum Posts

Get 40,000 bonus points (worth 40,000 Avios) and £300 dining credit with The Platinum Card

Check reward flight availability instantly for free!

See a whole year of reward seat availability on one page at SeatSpy.com

Get £10 when you spend £150 on your free Currensea card

Booking a luxury hotel?

Our luxury hotel booking service offers you GUARANTEED extra benefits over booking direct. Works with Four Seasons, Mandarin Oriental, The Ritz Carlton, St Regis and more. We've booked £1.7 million of rooms to date. Click for details.

SME? EARN POINTS WORTH 10,500 AVIOS WITH CAPITAL ON TAP

Get 20,000 bonus points, four airport lounge passes and your first year free with American Express Gold

The UK's biggest frequent flyer website uses cookies, which you can block via your browser settings. Continuing implies your consent to this policy. Our privacy policy is here.

Got it!