British regional airline Flybe has warned that it will end operations as an airline and be wound up if the proposed deal to sell the carrier to Connect Airways, a consortium of Virgin Atlantic and Stobart Air, falls through.
The deal to sell all Flybe Group assets to Connect Airways for only GBP2.8 million has been announced in mid-January and includes loans of up to GBP100 million, 15 million of which have already been paid. It was already approved by Flybe’s board of directors. However, shareholders will also need to cast their votes on the proposed deal. The airline will hold a general meeting on March 4th.
Due to the uncertainty whether or not this deal would be accepted by investors, Flybe has issued a publication to its shareholders, in which the directors of Flybe “strongly advise” all investors to vote in favor of the proposal, in order to receive a compensation of one Pence (EUR €0.011 / USD $0.013) per share. Flybe says that while this offer by Connect Airways is “disappointingly low”, it is the only option to save the struggling carrier from liquidation and still offer shareholders some return on investment.
Former Stobart Air CEO William Tinkler had purchased 11% of Flybe’s shares in early January and has also submitted an offer to buy the struggling carrier. This has been dismissed by the management of the British carrier.
Flybe’s directors are facing strong criticism from its investors over this proposed sale of all share capital to Connect Airways. In late-January, Hosking Partners, one of the airline’s largest shareholders, had called for replacement of Simon Laffin, the current chairman of Flybe Group, and demanded an investigation into the sale.
Exeter-based Flybe is Europe’s largest regional carrier and operates a fleet of more than 70 aircraft, including Bombardier Dash 8 Q400 and Embraer E-Jets on short-haul business and leisure routes throughout the continent. The airline is looking for a buyer since November last year, after it had issued a profit warning in October following increased fuel expenses, slowing demand and a difficult economic situation caused by Brexit.
Virgin Atlantic plans to rebrand Flybe under the proposed Connect Airways scheme and intends to feed its own long-haul flights with the regional carrier. It is currently not clear how the regional carrier’s mid and long-term operations will be influenced by Virgin Atlantic.
Read more: Virgin Atlantic to be main shareholder in Flybe takeover
Jakob Wert is an aviation journalist from Germany. He built up the website IFN.news and is the Editor-In-Chief of International Flight Network.