UK regional operators Flybe and Stobart Air will be combined and brought into an integrated commercial co-operation with Virgin Atlantic Airways’ long-haul operation under a newly-disclosed takeover plan.

The plan involves creating a UK network carrier, under the Virgin Atlantic brand, which will run alongside Stobart Air’s leasing operations – which will continue to operate as now.

Virgin Travel Group, owned by the same holding as Virgin Atlantic, will link with Stobart Group and funding firm Cyrus Capital to acquire Flybe through a jointly-owned operation called Connect Airways.

Connect Airways’ parties state that the combination of Flybe and Stobart Air would be a “compelling proposition”, operating a regional network in the UK and Ireland which will also include an “enhanced European footprint”.

Combining the airlines will give Flybe a stronger presence at London Heathrow and Manchester and an option to expand at London Southend.

“Together, we can provide excellent connectivity to our extensive long haul network and that of our joint venture partner, Delta Air Lines,” says Virgin Atlantic chief executive Shai Weiss.

Flybe’s board considers the terms of the acquisition offer by Connect to be “fair and reasonable”, and have unanimously recommended that Flybe shareholders vote in favour of the deal.

“The industry is suffering from higher fuel costs, currency fluctuations and significant uncertainties presented by Brexit,” says Flybe chief Christine Ourmieres-Widener, referring to the UK’s upcoming withdrawal from the European Union.

“We have been affected by all of these factors which have 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.”

She says that, under a “larger, stronger group” the airline will be “better placed to withstand these pressures”.

Stobart Group chief Warwick Brady adds that the combination will be the “best way” for Flybe and Stobart Air to play a role in UK regional operations. “The combined entity will be a powerful combination with sufficient scale to compete effectively in the UK and European airline markets,” he says.

Source: Cirium Dashboard